LISI GROUP (HOLDINGS) LIMITEDlisigroup.com.hk/file/LTN20160728668.pdfResources Limited (1231.HK) and China Shun Ke Long Holdings Ltd. (974.HK). He was independent non-executive director

LISI GROUP (HOLDINGS) LIMITED利時集團(控股)有限公司(incorporated in Bermuda with limited liability) (於百慕達註冊成立之有限公司)Stock Code 股份代號 : 526

2016 年報

Annual Report

CORPORATE INFORMATION 2

PROFILES OF DIRECTORS AND SENIOR MANAGEMENT 3

CHAIRMAN’S STATEMENT 6

MANAGEMENT DISCUSSION AND ANALYSIS 8

CORPORATE GOVERNANCE REPORT 13

DIRECTORS’ REPORT 17

INDEPENDENT AUDITOR’S REPORT 27

CONSOLIDATED STATEMENT OF PROFIT OR LOSS 29

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME 30

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 33

CONSOLIDATED CASH FLOW STATEMENT 35

NOTES TO THE FINANCIAL STATEMENTS 37

5-YEAR FINANCIAL SUMMARY 112

Contents

CORPORATE INFORMATION

LISI GROUP (HOLDINGS) LIMITED A N N U A L R E P O R T 2 0 1 602

BOARD OF DIRECTORSExecutive Directors

Mr LI Lixin (Chairman)

Mr CHENG Jianhe (Chief Executive Officer)

Ms JIN Yaxue

Non-Executive Director

Mr LAU Kin Hon

Independent Non-Executive Directors

Mr HE Chengying

Mr SHIN Yick Fabian

Mr CHEUNG Kiu Cho Vincent

COMPANY SECRETARYMr LAU Kin Hon

REGISTERED OFFICEClarendon House

Church Street

Hamilton

HM11, Bermuda

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESSWorkshop 06-07, 36/F King Palace Plaza

No. 52A Sha Tsui Road, Tsuen Wan

New Territories, Hong Kong

SECURITIES CODEHong Kong Stock Code: 526

WEBSITE ADDRESShttp://www.lisigroup.com.hk

AUDITORKPMG

8th Floor

Prince’s Building

10 Chater Road

Central, Hong Kong

PRINCIPAL BANKERSBank of Communications,

Shenzhen and Ningbo Branches,

the Perople’s Republic of China (the “PRC”)

Bank of Ningbo, PRC

China Construction Bank, Ningbo Branch, PRC

The Hongkong and Shanghai Banking

Corporation Limited

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICEMUFG Fund Services (Bermuda) Limited

26 Burnaby Street, Hamilton HM11

Bermuda

HONG KONG BRANCH SHAREREGISTRAR AND TRANSFER OFFICETricor Secretaries Limited

Level 22, Hopewell Centre

183 Queen’s Road East

Hong Kong

PROFILES OF DIRECTORS AND SENIOR MANAGEMENT


CHAIRMANMr LI Lixin, aged 48, is the executive director

(the “Director(s)”) of Lisi Group (Holdings) Limited

(the “Company”) and chairman of the Company

and its subsidiaries (the “Group”). Mr Li holds

an Executive Master of Business Administration

degree from Fudan University, and is the founder

and current chairman of a private group of

companies established in the PRC. The principal

businesses of this private group include import

and export business, real property development

and investment holding. The group also has

investments in real property development, printing

business and local bank in the PRC. Mr Li has 25

years of experience in the manufacture and sale

of plastic and hardware products and products for

daily consumption.

Mr L i was a committee member of the

Eleventh National Committee of the Chinese

People’s Political Consultative Conference. He is

currently a committee member of the Eleventh

Zhejiang Province Committee of the Chinese

People’s Political Consultative Conference, the vice

chairman of the China Plastics Processing Industry

Association, an executive committee member of

National Industrial and Commercial Union, and

the vice chairman of Ningbo City Industrial and

Commercial Union.

Mr Li was awarded the title of model worker

in Ningbo City for the years 2001 to 2003.

He was awarded the t it les of “Outstanding

Builder of Socialist Undertakings of Chinese

Characteristics” in 2003 and 2006 by the People’s

Governments of Ningbo City and Zhej iang

Province respectively and was renowned for his

contribution to the “Honourable Undertakings”

and “Shining Star“ promotional programme by

the People’s Government of Zhejiang Province.

He was appointed as non-executive Director and

chairman of the Group in September 2008 and re-

designated as executive Director in April 2011.

EXECUTIVE DIRECTORMr CHENG Jianhe, aged 50, is the Chief

Executive Officer of the Group. Mr Cheng has

over 27 years of experience in the financial

management , t a x p l ann ing , co s t con t ro l ,

investment and financing management fields

in various industries, including manufacturing,

business and paper mills. Mr Cheng graduated

from the J iangxi Univers i ty of F inance and

Economics and majored in financial accounting,

and completed the Advanced Programme in

Business Administration for Managers offered by

Tsinghua University. He holds an Executive Master

of Business Administration degree from Renmin

University of China. By profession, Mr Cheng is

a Certified Public Accountant in the PRC and a

member of the Chinese Institute of Certified Public

Accountants.

He was appointed as executive Director and

Chief Executive Officer of the Group in September

2008.

Ms JIN Yaxue , aged 46, is the General

Manager of household products business of the

Group. Ms Jin has been responsible for sales and

operations management of Ningbo plant since

1998. She holds an Executive Master of Business

Administration degree from Fudan University.

She has over 20 years experience in development

and sales of household products and sundries.

She joined the Group when the Ningbo plant was

acquired by the Group in 2010 and was appointed

as an executive Director in July 2014.

NON-EXECUTIVE DIRECTORMr LAU Kin Hon, aged 48, is a Hong Kong

practicing solicitor. He has been practicing law

in Hong Kong for 24 years. Mr Lau received his

bachelor of laws degree from University College,

London, UK. He was appointed as non-executive

Director and company secretary of the Company in

May 2005.



INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr SHIN Yick Fabian, aged 47, is currently the independent non-executive director of Newton Resources Limited (1231.HK) and China Shun Ke Long Holdings Ltd. (974.HK). He was independent non-executive director of Little Sheep Limited (968.HK), a company listed in Hong Kong and C & O Pharmaceutical Technology (Holdings) Limited (E92.SI), a company listed in Singapore till 2011.

Mr Shin graduated from the University of Birmingham in England with a bachelor’s degree in commerce. After graduation, he worked in the audit department of Deloitte Touche Tohmatsu. He had also worked in a l isted company in Hong Kong as group financial controller and company secretary. He is a fel low member of Hong Kong Inst i tute of Cert i f ied Publ ic Accountants, Association of Chartered Certified Accountants, Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Company Secretaries. He was appointed as independent non-executive Director in January 2013.

Mr HE Chengying , aged 53, graduated

from the Department of Accountancy of South

Western University of Finance and Economics,

holds a Master Degree of Economics from Zhejiang

University, a Doctoral Degree of Economics

from Xiamen University. He previously worked

for Shenzhen Investment Holding Corporation,

China Eagle Securities and United Securities.

Mr He is currently the Chairman of Supervisory

Committee and General Manager of the R&D

Department of Guosen Securities. He is also an

associate professor, senior economist and a special

research fellow of the China Management Science

Research Institute and Researcher (Professor) of

Zhejiang University of Finance and Economy. Mr

He had previously engaged in state enterprise,

state-owned asset management, as wel l as

directly participated in drafting and formulating

policies for state enterprise and state-owned

asset management reforms. Subsequently, Mr

He has engaged in stock market innovation,

asset reorganisation, as well as capital market

operation and research. He has accumulated

extensive experience in corporate reform, asset

reorganisation and capital management planning.

He was appointed as independent non-executive

Director in September 2006.

Mr CHEUNG Kiu Cho Vincent, aged 40, is a

Registered Professional Surveyor in the General

Practice Division and member of The Hong Kong

Institute of Surveyors and fellow member of

The Royal Institution of Chartered Surveyors.

Mr Cheung holds a Master Degree of Business

Administration in International Management

awarded by University of London in association

with Royal Holloway and Bedford New College and

a Bachelor Degree of Science (Honours) in Real

Estate awarded by The Hong Kong Polytechnic

University. Mr Cheung is the Executive Director,

Asia and Head of Valuation and Advisory Services

Department of a multi-national corporation. Mr

Cheung has over 19 years of experience in assets

valuations, assets management and corporate

advisory. He was appointed as independent non-

executive Director in June 2006.

SENIOR MANAGEMENTMr PUN Kam Wai Peter , aged 54 , i s

the Chief Financial Officer of the Group. Mr

Pun possesses over 26 years of experience in

financial management and corporate planning in

various industries including FMCG (fast moving

consumer goods ) , en te r ta inment , te l ecom

service, manufacturing and financial information

service. He was the financial controller of a listed

company in Hong Kong for which he led the

successful initial public offering on the Growth

Enterprise Market of the Stock Exchange of

Hong Kong Limited. By profession, Mr Pun is a

member of Hong Kong Institute of Certified Public

Accountants and CPA Australia. Besides, he holds

a Master degree in Business Administration from

the Chinese University of Hong Kong and a Master

degree in Professional Accounting from University

of Southern Queensland, Australia. He joined the

Group in July 2009.



Madam ZHENG Rong, aged 45, is the chief

financial officer of New JoySun responsible for

accounting and financial matters of New JoySun

Group since 2007. Madam Zheng has nearly

22 years of experience in the retail industry

and around 20 years of experience in financial

management in various industries. Madam Zheng

has an EMBA degree from Fudan University in

Shanghai. She joined the Group when Ningbo New

JoySun was acquired by the Group in 2013.

Mr GUI Bao, aged 59, is the general manager

of Ningbo New JoySun Non-staple Food Wholesale

Company Limited. Mr Gui has been responsible for

the daily management and direction of operations

of Ningbo New JoySun Non-staple Food Wholesale

Company since 1994. Mr Gui has worked in the

wholesale of wine industry for a long time and has

a certain level of reputation in the wine industry in

the country. His performance in the wine industry

has been in the top rank in recent years. He joined

the Group when Ningbo New JoySun was acquired

by the Group in 2013.

Mr WANG Chaohong , aged 43, i s the

general manager of New JoySun supermarket

and is responsible for the daily management and

direction of operations of the New JoySun Group.

Mr Wang has been the purchasing director of

a company of large-scale chain stores and has

accumulated many years’ management experience

in the retail industry. Mr Wang holds an Executive

Master of Business Administration degree from

the Shanghai Jiao Tong University. He joined the

Group in 2013.

Mr LAM Wai Wah, Alan, aged 52, is the

Senior Sales and Marketing Manager of household

products business of the Group. Mr Lam has been

responsible for the international marketing and

sales of products manufactured in Ningbo plant

since September 2005. He has over 25 years

experience in marketing and sales of household

products and sundries. He joined the Group when

the Ningbo plant was acquired by the Group in

2010.

Mr NG Chun Ki, aged 38, is the Technical

Deputy General Manager for household products

business of the Group. Mr Ng has been responsible

for the product development and production

management of Ningbo plant since June 2003

and has over 21 years experience in product

development and manufacturing of plastic moulds.

He joined Group when the Ningbo plant was

acquired by the Group in 2010.

Mr CHEN Tao Li, aged 42, is the Production

Deputy General Manager of household products

business of the Group. He is responsible for

the dai ly production operations, production

management, planning, quality control, logistics

and plant operat ion. He has over 17 years

experience in production management. Prior

to joining the Group, he was the production

manager (vice-president), quality control manager

and management representative of an electronic

components specialists company in Guangdong.

Mr Chen holds a Master of Business Administration

degree from Lanzhou University. He joined the

Group in 2007.

CHAIRMAN’S STATEMENT


Dear Shareholders,

Given the challenging business environment,

we had fair performance in 2015/16. For the year

ended 31 March 2016 (the “Year”), our revenue

was RMB1,085.7 million which represented a

decrease of 6.2% versus 2014/15. Our net profit

for the Year was RMB25.0 million compared to

a net profit of RMB80.3 million in 2014/15. The

decrease in net profit was primarily due to the

negative change of RMB90.5 million for the Year in

the fair value on the derivative component of the

convertible bonds issued by the Company for the

acquisition of New JoySun Group in August 2013

and still outstanding during the Year. Excluding

the impact of this negative fair value change, our

operating business delivered satisfactory business

results in 2015/16.

The board of Directors (the “Board”) has

resolved not to recommend any final dividend for

the Year.

FURTHER STRENGTHENING OUR COMPETENCE AND COMPETITIVENESS IN THE BUSINESS OF HOUSEHOLD PRODUCTS

The Group took a major step in late 2012 to

relocate our manufacturing facilities in Shenzhen

to Ningbo and consolidate all our production

and operations resources in household products

business into one location. After struggling for a

short period with the adverse impact of disruption

in normal operations, loss of some sales orders

and termination of our workforce in Shenzhen,

we had fully recovered and resumed our good

operational efficiency. Though the revenue of

our manufacturing business dropped in 2015/16,

the gross and operating profits of this business

segment were very good, particularly given the

slow macro-economic growth and stiff competition

in all our major overseas markets.

The management team of household products

business kept on adopting effective sales and

cost management measures throughout the Year.

In order to cope with the environment of fierce

competition and uncertain market outlook, the

Group continues to drive vigorously on product

development and align our client base with higher

margin products and customers. Being one of

the leading household products suppliers with

multiproduct categories in Asia, we shall capitalize

on this competitive edge to develop and offer

sophisticated range of household products with

room for margin improvement.

The plant relocation, together with other

sales and cost management measures, is a

very important action to strengthen our overall

capability to boost our sales and market share

as well as our drive for margin improvement in

household products business.

DISPOSAL OF THE LAND OF THE PREVIOUS SHENZHEN PLANT

On 19 May 2014, we entered into agreement

with Shenzhen City Xinshun Property Development

Company Limited in relation to the proposed

disposal of the land of our previous Shenzhen

plant of the Group. The aggregate amount of

the transaction would be RMB1,782 mil l ion

(subsequently reduced to RMB1,732 million when

some terms were and could only be finalized in

2015-16) and settled in cash. This transaction

constituted a very substantial disposal of the

Company and a special general meeting was held

on 8 July 2014.

The transaction is st i l l in the process of

completion and the collection of the consideration

is in progress according to the terms of the

agreement of the deal . The Group expects

to complete the collection of the proceeds in

2016/17. This transaction provides very significant

and substantial funding for the Group to consider

future investments or acquisitions should such

opportunities arise and/or distribution of dividend.

CHAIRMAN’S STATEMENT


EXPANDING INTO NEW BUSINESSES WITH GROWTH POTENTIAL

In addition to the investments in Hangzhou

Lion Microelectronics Co., Ltd. and Veritas-MSI

(China) Co., Ltd. in 2010 and 2012 respectively,

the acquisition of retail and wholesale business

in Ningbo was completed on 30 August 2013.

We shall monitor the performance of our new

business closely and consider various alternatives

on managing such investments with the objective

to maximize the return for the best interest of the

shareholders of the Company.

The Group is a lso act ive ly pursuing the

possible acquisition of a target group which is

doing business in import and trading of cars and

related service in China. For details of this possible

acquisition, please refer to the announcement

dated 25 September 2015.

APPRECIATIONWith the growth momentum of household

products business recovered from plant relocation

transition, the disposal of land in Shenzhen for

substantial consideration and the expansion into

retail and wholesale business, the Group is well

positioned with a diversified and balanced business

portfolio to grasp the business opportunities

and deliver business growth and financial results

with sustainable improvement. I am confident

and optimistic with the prospect of the business

development of the Group.

On behalf of the Board, I would like to thank

our customers, suppliers, business partners and

the shareholders for their continuous support.

Last but not least, I would also like to take this

opportunity to express my heartiest gratitude to all

the employees of the Group for their industrious

devotion and achievements in the challenging but

exciting 2015/16. We shall continue to target for

long term business growth of the Group and strive

for improving financial results and returns to the

shareholders.

Li Lixin

Chairman

Hong Kong, 29 June 2016

MANAGEMENT DISCUSSION AND ANALYSIS


FINANCIAL HIGHLIGHTSGeneral Information

For the year ended 31 March 2016 (the

“Year”), the Group recorded a revenue of

approximately RMB1,085.7 million, representing

a decrease of 6.2% when compared with the

revenue of approximately RMB1,158.0 million

reported for the last year. Net profit for the Year

was approximately RMB25.0 million compared to a

net profit of RMB80.3 million for the last year. The

Group’s basic and diluted earnings per share were

RMB0.55 cent and RMB0.55 cent respectively and

the Group’s basic and diluted earnings per share

were RMB1.97 cent and RMB0.61 cent respectively

for the last year.

Liquidity and Financial Resources

As at 31 March 2016, the Group’s net assets

increased to RMB1,739.8 mil l ion, rendering

net asset value per share at RMB38.0 cent. The

Group’s total assets at that date were valued at

RMB3,561.8 million, including cash and bank

deposits of approximately RMB577.6 million and

current available-for-sale investments of RMB644.9

mil l ion. Consol idated bank loans and other

borrowings amounted to RMB1,061.8 million.

Its debt-to-equity ratio (bank loans and other

borrowings over total equity) has been decreased

from 67.1% as at 31 March 2015 to 61.0% as at

31 March 2016.

Most of the Group business transactions were

conducted in RMB and USD. As at 31 March 2016,

the Group’s borrowings were denominated in

RMB, EUR, HK$ and USD.

Capital Structure

On 30 August 2013, the Company allotted

and issued 1,700,000,000 consideration shares

at the issue price of HK$0.30 per share and the

consideration convertible bonds in the principal

amount of HK$382.8 mi l l ion at the in i t ia l

conversion price of HK$0.30 per share to Shi

Hui Holdings Limited, which was wholly owned

by Big-Max Manufacturing Co., Limited, the

majority shareholder of the Company. For details

of this major change in the capital structure of

the Company, please refer to the circular of the

Company dated 22 May 2013. On 31 October

2013, 31 December 2013 and 3 March 2014

and 19 September 2014, the Company partially

redeemed approx imate l y HK$20.8 mi l l ion ,

HK$136.8 million, HK$83.5 million and HK$20.3

mill ion convertible bonds and the remaining

balance of approximately HK$121.4 mi l l ion

convertible bonds was converted into 404,668,141

ordinary shares of the Company at conversion

price of HK$0.3 per share at 5 June 2015 and the

new ordinary shares were issued. Upon completion

of this conversion, the number of ordinary

shares of the Company in issue increased from

4,176,963,794 to 4,581,631,935. As at 31 March

2016, the Group’s major borrowings included

bank loans, which had an outstanding balance

of RMB1,056.1 million, other borrowings from

a shareholder and a third party totaling RMB5.7

million. All of the Group’s borrowings have been

denominated in RMB, EUR, HK$ and USD.

Pledge of Assets

The Group’s leasehold land and buildings and

investment properties with a carrying amount of

RMB1,062.0 million as at 31 March 2016 were

pledged to secure bank borrowing and facilities of

the Group.



Capital Expenditure and Commitments

The Group w i l l cont inue to a l loca te a

reasonable amount of resources to acquisition,

better ut i l izat ion of the Company’s assets,

and improvement of capital assets to improve

operations efficiency and to meet customer needs

and market demands. Sources of funding are

expected to come primarily from trading revenue

that the Group will generate from operations

and alternative debt and equity financing, and

disposal of available-for-sale investments/assets. In

particular, the disposal of the land of the previous

factory of the Group in Shenzhen generates

substant ia l cash in 2015/16 as the Group

continues to collect the remaining balance of the

net proceeds realized from the deal.

Exposure to Foreign-Exchange Fluctuations

The functional currency of the Company

is RMB and the Group’s monetary assets and

liabilities were principally denominated in RMB,

EUR, HK$ and USD. The Group considers the risk

exposure to foreign currency fluctuation would

be essentially in line with the performance of the

exchange rate of RMB. Given that RMB is not

yet an international hard currency, there is no

effective method to hedge the relevant risk for

the size and cash flow pattern of the Group. As

the Chinese Government is driving RMB to get

more internationalized and towards free floating

in the future, we expect more hedging tools will

be available in the currency market. The Group will

monitor closely the development of currency policy

of the Chinese Government and the availability of

the hedging tools which are appropriate for the

manufacturing business operations of the Group

in this respect. For the EUR short term loan the

Company obtained from a bank in HK which is

due in June 2016 and subsequently extended to

June 2017 and secured by a RMB fixed deposit of

a subsidiary of the Group, it is widely expected in

the forex market that EUR will further weaken in

the near future especially after Britain decided to

leave the European Union and the currency risk

exposure from this EUR loan is quite limited. The

management feels comfortable with such limited

exposure but will still manage this currency risk

with utmost care.

Segment Information

With the acquisition of New JoySun Group,

retail and wholesale business has emerged to

become the most important business segment of

the Group in the Year and accounted for 62.7% of

total revenue. Manufacturing and trading business

and investment holding business had 34.1% and

3.2% of the remaining.

In terms of geographical location, China

became the Group’s primary market, which

accounted for 66.5% of total revenue. The

remaining comprised of revenue from North

America 29.4%, Europe 1.6% and others 2.5%.

Contingent Liabilities

As at 31 March 2016, the Group pledged

ce r ta in l easeho ld l and and bu i ld ings and

investment properties with an aggregate carrying

amount of approximately RMB21.7 million to

secure bank loans borrowed by the related

companies under the control of Mr. Li Lixin,

Chairman of the Company. Such arrangements

were made by New JoySun group prior to the

acquisition in August 2013. The directors of

the Company do not consider it probable that

a claim in excess of the provision for warranties

provided by the Group will be made against the

Group under any of the guarantees. The maximum

liability of the Group as of the close of business

under the guarantees issued is RMB36.7 million

being the balance of the principal amount of the

bank loans the Group pledged for.

Investments in New Businesses

During the Year, our equity interest in Veritas-

Msi (China) Co., Ltd. (“VMCL”) remained at

24.76%. VMCL is an associate company of

the Group. The core business of VMCL is in

the development and application of separation

technology and multiphase measurement sciences

for the oil and gas industry. The Company will

consider to sell our investment in VMCL should

there be attractive offer which can give us a good

return from this investment.



Another investment in recent years was QL

Electronics Co., Ltd (“QLEC”). As QLEC was

under restructuring for business expansion and

opportunities in capital market. QLEC was split

into two companies named QLEC (subsequently

renamed as JRH QL Electronics Co., Ltd (“JRH”)

and Hangzhou Lion Microelectronics Co., Ltd

(“HLMC”). HLMC is the parent company of JRH. At

22 January 2016, HLMC increased the share capital

from 187,553,401 to 300,000,000 shares. During

the Year, our investment of 18,318,800 shares

in JRH were entitled to subscribe 14,417,912

shares in HLMC. Before the restructuring, our

equity interest in HLMC was 8.211%. After the

restructuring, our equity interest in HLMC was

7.592%. The core business of HLMC is in the

development and manufacturing of semiconductor

materials. As an investor, the Company is satisfied

with the business performance of HLMC.

The latest investment of the Company is the

acquisition of 95% beneficiary interest in certain

department stores and supermarket chain in

Ningbo from substantial Shareholder which was

approved by the Shareholders of the Company on

7 June 2013 and completed on 30 August 2013.

Furthermore, on 21 June 2013, the Company also

announced the acquisition of the remaining 5%

beneficiary interest in those department stores

and supermarket chain mentioned above from an

independent party so that, upon completion of

these two acquisitions, the department stores and

supermarket chain became wholly owned by the

Group. For details of the investment, please refer

to announcement dated 5 March 2013, the circular

dated 22 May 2013 and the announcement

dated 21 June 2013 released by the Company.

This investment has brought substantial business

growth to the Group and broadened our business

with a new retail and wholesale sector which is

encountered with challenges from e-commerce in

the short term but still considered to be a good

market in the long term with the continuous

economic growth of China and the supportive

policy of the Chinese Government to stimulate

domestic consumer market.

Also related to the development of New JoySun

Group, on 3 August 2015 New JoySun Corp., a

wholly owned subsidiary of the Group, agreed

with Sanjiang Shopping Club Co., Ltd to acquire

18% equity interest in New JoySun Supermarket

Chain Limited at the consideration of RMB38.9

million cash and the payment of acquisition was

completed on 31 March 2016 and the business

license was completed on 7 April 2016. Upon

complet ion of the acquis i t ion, New JoySun

Supermarket Chain Limited will become a wholly

owned subsidiary of the Group. For details of this

acquisition, please refer to the announcement of

the Company dated 3 August 2015.

The Directors consider the new businesses are

in challenging market situations but still have good

business prospects. We are optimistic on the values

of these investments and contribution of financial

results brought to the Group in the future.

Employee Information

As at 31 March 2016, the Group employed a

workforce of 1,826 employees in its various chain

stores, offices and factories located in Hong Kong

and the PRC. Competitive remuneration packages

were provided and commensurate with individual

responsibilities, qualifications, experience and

performance. The Group provided management

skills workshops, practical seminars for knowledge

update, on-the-job training and safety training

programs to its employees. There was a share-

option scheme in force but no share option was

granted during the Year.

Review of Operations

For the Year, the Group recorded a net profit

of RMB25.0 million, compared to the net profit of

RMB80.3 million for the corresponding last year.

This decrease was primarily attributable to the

negative change of RMB90.5 million for the Year

in the fair value on the derivative component of

the convertible bonds issued by the Company for

the acquisition of New JoySun Group in August

2013 and still outstanding during the Year. This

factor had impact in profit and loss but not in

cashflow.



Revenue

During the Year, the Group recorded total

revenue of approximately RMB1,085.7 million,

representing a decrease of 6.2% when compared

w i th the to t a l r e venue o f app rox ima te l y

RMB1,158.0 million reported for the last year.

Manufacturing and Trading Business

During the Year, the manufacturing and trading

business contributed approximately RMB369.4

million to the total revenue of the Group. The

business of this segment decreased by RMB31.7

million when compared with the corresponding

last year of approximately RMB401.1 million. The

decrease was mainly due to the reduction of orders

from customers and pricing pressure which are

a reflection of the current weak market situation

and the cyclical order pattern of some our key

customers. The Group will continue its cost control

measures and business strategy of focusing on

higher margin products and the development of

new products and customers.

Retail and Wholesale Business

Retai l and wholesale business decreased

by 3.6% and 11.5% to RMB422.1 million and

RMB258.6 million respectively for the Year as

compared with corresponding last year. The

impact of the e-commerce, competition from

large supermarket chains and new shopping malls

nearby were the key challenges resulting in the

drop of revenue in our retail business. On the other

hand, the Chinese central government continues

to control strictly on business entertainment and

expenditures, so the revenue of wholesale business

in wine and beverages dropped inevitably.

Investment Holding Business

Dividend income decreased by 43.1% to

RMB0.5 million and investment income increased

by 36.4% to RMB34.4 million during the Year as

compared with the corresponding last year.

PROSPECTSFurther Strengthening Our Competence and

Competitiveness in the Business of Household

Products

Relocation of the Group’s manufacturing plant

in Shenzhen to Ningbo, PRC, was completed. The

manufacturing facilities of household products of

the Group are now consolidated in one location

in Ningbo. Though plant relocation had been a

difficult process and resulted in disturbances in our

plant operations and business development, the

benefit on our operations in terms of efficiency

improvement in management resources and

synergies in scale procurement and production

operations began to take place and contribute to

the business on long-term basis. The Group will

continue its cost control measures and business

strategy of focusing on higher margin products

and customers that have been improving the

segment’s business and financial performance.

Apart from the continuing effort in cost control

measures such as integration and realignment

of management and sales resources, structural

changes in procurement and manufacturing

planning and exploration of relocation of its

production facilities (or part of them) to lower cost

areas, the Group will step up its efforts to explore

new products. Besides, the Group will also enlarge

our customer base in both existing and emerging

markets. We shal l a lso monitor c losely the

volatility of global financial markets, the extension

of different markets and adjust our sales and

purchase strategies accordingly to achieve our goal

of continuous business growth and performance

improvement.



Disposal of the Land of the Previous Shenzhen

Plant

On 19 May 2014, Jinda Plastic Metal Products

(Shenzhen) Co. , L imi ted (“ J inda P las t i c” ) ,

an indirect whol ly-owned subsidiary of the

Company, and Shenzhen City XingShun Property

Development Company Limited entered into

the Relocation Compensation Agreement and

the Supplementary Agreement in relation to the

proposed disposal of the land owned by Jinda

Plastic and situated within the Jinda Industrial Area

which was the location of the previous Shenzhen

plant of the Group. The aggregate amount of

compensation would be RMB1,782 million and

settled in cash. The Directors considered that

the transaction would be in the interest of the

Company and the Shareholders as a whole. For

details of this transaction, please refer to the

announcement of the Company dated 27 May

2014 and the circular of the Company dated 18

June 2014. A special general meeting was held on

8 July 2014 and the transaction was approved by

the Shareholders. The Directors considered that the

disposal of the land in Shenzhen would provide

very substantial funding for the Group to improve

the internal working capital position and make

future investment(s) or acquisition(s) should there

be such appropriate opportunities. The settlement

of consideration for this transaction has been

executing by phases according to the terms of the

agreements. Jinda Plastic and XingShun Property

entered into a supplemental agreement on 18

November 2015 pursuant to which the parties

agreed that the amount of land premium for the

purpose of calculating the Compensation shall

be RMB950 million and accordingly the amount

of Compensation payable to Jinda Plastic shall be

adjusted downward from RMB1,782 million to

RMB1,732 million. For details of this substantial

disposal, please refer to the announcement

dated 18 November 2015. On 22 May 2015,

the board of directors approved to distribute a

special distribution of HK$0.05 per share and

the Company paid the special distribution total

amount of HK$229,082,000 on 10 June 2015. The

Company has not made any decision on the use of

remaining funds generated from the land disposal.

Expanding into New Businesses with Growth

Potential

In addit ion to the investments in QLEC

and VMCL in 2010 and 2012 respectively, the

acquisition of retail and wholesale business in

Ningbo has been completed on 30 August 2013.

The consideration of HK$892.8 million was settled

by the issuance of new shares and convertible

bonds. The acquisition of the remaining 5%

beneficiary interest from an independent party

was completed at the consideration of RMB31.7

million and settled by internal financial resources

of the Group. With substantial funding to be

available upon completion with the disposal of the

land in Shenzhen and settlement of consideration

has been executing by phases, the management

will actively look into investment and acquisition

targets of appropriate and reasonable valuation

and consider other uses of fund for the best

benefit of the company and the Shareholders as

a whole. The investment objectives of the Group

will be in driving impactful business growth,

strengthening further competitive advantage of

existing business segments and enhancing the

return to the Shareholders.

Memorandum of Understanding in Relation to

a Proposed Acquisition

On 25 September 2015, the Company and

Mighty Mark Investments Limited (the “Vendor”)

entered into a memorandum of understanding

(“MOU”), pursuant to which the parties agreed to

enter into further negotiation regarding a possible

conditional acquisition by the Company, and the

possible conditional disposal by the Vendor, of the

entire shareholding interest in Mega Convention

Group Limited (the “Target Company”). Subject to

the finalization and entering into of the definitive

agreements to be entered into by the Company

and the Vendor and upon the completion of

the Proposed Acquisition, the Target Company

will become a wholly-owned subsidiary of the

Company. The principal business of the Target

Group upon completion of its group restructuring,

will be import and trading of cars and related

services in China. For details of the Proposed

Acquisition, please refer to the announcement

dated 25 September 2015.

CORPORATE GOVERNANCE REPORT


CORPORATE GOVERNANCE PRACTICESThe Company is committed to maintaining

a high standard of corporate governance for

enhancing shareholder’s value. The Company

has complied with the code provisions of the

Corporate Governance Code (the “CG Code”)

contained in Appendix 14 of the Listing Rules for

the Year save as herein below disclosed.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code

for Securities Transactions by Directors of Listed

Issuers (the “Model Code”) set out in Appendix

10 of the Listing Rules as the code of conduct

regarding securities transactions by the Directors.

Having made specific enquiry of all Directors,

the Company confirmed that all Directors have

complied with the required standards as set out in

the Model Code during the Year.

BOARD OF DIRECTORSThe Board is responsible for the formulation

of strategies and control of the Group and for

monitoring the performance of the management

teams. The chief executive officer and the senior

management members are responsible for effective

implementation of the Board’s decisions and the

day-to-day operations of the Group. During the

Year, the Board was comprised of three executive

Directors, one non-executive Director and three

independent non-executive Directors as follows:

Executive Directors

Li Lixin (Chairman)

Cheng Jianhe (Chief Executive Officer)

Jin Yaxue

Non-Executive Director

Lau Kin Hon

Independent Non-Executive Directors

He Chengying

Shin Yick Fabian

Cheung Kiu Cho Vincent

During the Year, nine Board meetings were

held. Notice of at least 14 days was given to

Directors for regular Board meetings during the

Year as required by the CG Code Provision A.1.3.

During the Year, all Directors were provided

with reading materials and briefings to refresh

their knowledge on List ing Rules and other

relevant laws and regulations. Mr Lau Kin Hon and

Mr Shin Yick Fabian have attended courses and/

or seminars relevant to the roles and duties as

directors of listed companies.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

During the Year, Mr Li Lixin was the chairman

of the Company and Mr Cheng Jianhe was

the chief executive off icer. The div is ion of

responsibilities between the chairman and the

chief executive officer were clearly established.

NON-EXECUTIVE DIRECTORNon-executive Director is appointed for a

fixed term of two years or three years, subject to

retirement and re-election at the annual general

meeting in accordance with the Bye-laws of the

Company.

REMUNERATION COMMITTEEThe role and function of the remuneration

committee are principally advising the Board on the

policy and structure for remuneration of Directors

and senior management and on establishing a

formal and transparent procedure for developing

policy on such remuneration, determining the

specific remuneration packages of all executive

Directors and senior management and ensuring

that no Director or any of his associates is involved

in deciding his own remuneration.

During the Year, the remuneration committee

was comprised of two independent non-executive

Directors, Mr Shin Yick Fabian and Mr Cheung Kiu

Cho Vincent, and one executive Director, Ms Jin

Yaxue (chairman). One meeting was held during

the Year.



During the Year, the remuneration committee

has reviewed and made recommendations to the

Board on the remuneration packages of individual

Directors and senior management and the overall

remuneration policy of the Group and assessed

performance of the Directors.

NOMINATION COMMITTEEThe role and function of the nomination

committee are principally to evaluate the structure

of the Board regularly and make recommendations

to the Board on any proposed change. The

Committee shall review the structure, size and

composition (including the skil ls, knowledge

and e xpe r i ence ) o f t he Boa rd and make

recommendations on any proposed changes to the

Board to complement the Company’s corporate

strategy; identify individuals suitably qualified

to become Board members and select or make

recommendations to the Board on the selection

of, individuals nominated for directorships; assess

the independence of independent non-executive

Directors; and make recommendations to the

Board on the appointment or re-appointment of

Directors and succession planning for Directors in

particular the chairman and the chief executive

officer of the Company.

The nominat ion commit tee i s cur rent l y

comprised of two independent non-executive

Directors, Mr Cheung Kiu Cho Vincent (chairman)

and Mr Shin Yick Fabian, and one non-executive

Director, Mr Lau Kin Hon. One meeting was held

during the Year.

During the Year, the nomination committee

has monitored and reviewed the nomination

procedures and process for the nomination of

Directors, reviewed the composition of the Board

and made recommendation to the Board on

matters related to election and retirement of the

Directors.

AUDIT COMMITTEEThe audit committee is currently comprised

of three independent non-executive Directors,

Mr Shin Yick Fabian (chairman), Mr Cheung Kiu

Cho Vincent and Mr He Chengying. Two audit

committee meetings were held during the Year.

The roles and function of the audit committee

are principally making recommendation to the

Board on the engagement of external auditors,

reviewing the financial information of the Group

and overseeing the Group’s financial reporting

system, internal control and risk management

systems.

During the Year, the audit committee reviewed

the Group’s annual results for the year ended

31 March 2015 and the interim results for the

six months ended 30 September 2015. The audit

committee also reviewed the Group’s financial

controls, internal control and risk management

systems and the adequacy of resources, staff

qualifications and experience, training programs

and budget of the Company’s accounting and

financial reporting function.

NUMBER OF MEETINGS AND DIRECTORS’ ATTENDANCE

Attendance records of the Directors at Board

meetings (BM), audit committee meetings (ACM),

remunera t ion commi t tee meet ings (RCM) ,

nomination committee meetings (NCM) and

general meeting (GM) held during the year are set

out below:



Number of meetings

attended/held

during the Year

BM ACM RCM NCM GM

Executive directors

Li Lixin 4/9 NA NA NA 0/2

Cheng Jianhe 9/9 NA NA NA 0/2

Jin Yaxue 5/9 NA 1/1 NA 0/2

Non-executive

director

Lau Kin Hon 9/9 NA NA 1/1 2/2

Independent

non-executive

directors

He Chengying 8/9 2/2 NA NA 0/2

Shin Yick Fabian 9/9 2/2 1/1 1/1 1/2

Cheung Kiu Cho Vincent 9/9 2/2 1/1 1/1 2/2

Pursuant to code E.1.2 of the CG Code, the

chairman of the Board, the chairman of the audit

committee, the chairman of the remuneration

committee and the chairman of the nomination

committee should attend the annual general

meeting. During the Year, the chairman of the

Board and the chairman of the remuneration

committee were unable to attend the annual

general meeting due to other commitments.

ACCOUNTABILITY AND AUDITThe Directors acknowledge their responsibilities

for preparing the Group’s financial statements,

which give a true and fair view of the state of

affairs of the Group and of the results and cash

flow for the reporting period. The Board is aware

that its responsibilities to present a balanced,

clear and understandable assessment extend to

annual and interim reports, reports to regulators,

other inside information and financial disclosures

required under the List ing Rules as well as

information required to be disclosed pursuant to

statutory requirements. The Board has conducted

an annual review of the effectiveness of the

system of internal control and risk management of

the Group.

AUDITOR’S REMUNERATIONDuring the Year, the auditor’s remuneration

paid and payable in respect of statutory audit

services, provided by the auditor of the Company

to the Group amounted to RMB1,800,000.



SHAREHOLDERS’ RIGHTSShareholders may send their direct enquiries to

the Board in writing by mail through the company

secretary of the Company to the Company’s

principal place of business in Hong Kong for the

time being.

Pursuant the Company’s bye-laws, shareholders

holding at the date of deposit of the requisition

not less than one-tenth of the paid up capital

of the Company carrying the right of voting at

general meetings of the Company shall at all times

have the right, by written requisition to the Board

or the secretary of the Company, to require a

special general meeting to be called by the Board

for the transaction of any business specified in

such requisition; and such meeting shall be held

within two (2) months after the deposit of such

requisition. If within twenty-one (21) days of such

deposit the Board fails to proceed to convene such

meeting the requisitionists themselves may do so in

accordance with the provisions of the Companies

Act 1981 of Bermuda.

To put forward a proposal at a shareholders’

meet ing , sha reho lder shou ld comply w i th

all provisions of the Companies Act 1981 of

Bermuda. In addition, shareholders are requested

to submit a written request stating the resolution

intended to be moved at the general meeting; or

a statement with respect to the matter referred

to in any proposed resolution or the business to

be dealt with at a particular general meeting. The

written request/statements must be signed by the

shareholder(s) concerned and deposited at the

Company’s registered office and principal place of

business in Hong Kong, for the attention of the

company secretary of the Company.

DIRECTORS’ REPORT


The Directors submit their report together with

the audited consolidated financial statements of

the Company and the Group for the Year.

PRINCIPAL ACTIVITIESThe principal activity of the Company is

investment holding and the principal activities of

its principal subsidiaries are set out in note 14 to

the consolidated financial statements.

RESULTS AND APPROPRIATIONSThe results of the Group for the Year are set

out on page 29 of this annual report.

A management discussion and analysis of the

results of the Group for the Year is set out on

page 8 to 12 of this annual report.

The Board do not recommend the payment of

final dividend.

RESERVESMovements in the reserves of the Group and

the Company during the Year are set out on page

33 of this annual report and in note 27 to the

consolidated financial statements respectively.

FIXED ASSETSDetails of the movement in fixed assets of

the Group are set out in notes 12 and 13 to the

consolidated financial statements.

SUBSIDIARIESPa r t i cu la r s o f the Company ’ s p r inc ipa l

subsidiaries as at 31 March 2016 are set out in

note 14 to the consolidated financial statements.

SHARE CAPITAL AND SHARE OPTIONSDetails of the share capital and share options

of the Company are set out in note 27(c) to the

consolidated financial statements and on page 24

of this annual report respectively.

DISTRIBUTABLE RESERVESA s a t 3 1 M a r c h 2 0 1 6 , t h e a g g r e g a t e

amount of reserves (including the Company’s

retained profits, if any, and share premium,

subject to equity shareholders’ approval, and

contributed surplus, subject to satisfaction of

the related laws and regulations) available for

distribution to the equity shareholders of the

Company was RMB828,635,000 (31 March

2015:RMB621,811,000). The directors of the

Company did not recommend the payment of a

final dividend for the year ended 31 March 2016

(2015:RMBNIL).

PRE-EMPTIVE RIGHTSThere is no provision for pre-emptive rights

under the Company’s bye-laws and there was no

restriction against such rights under the laws of

Bermuda.

FIVE-YEAR FINANCIAL SUMMARYA summary of the results and of the assets and

liabilities of the Group for the last five financial

years is set out on page 112 of this annual report.

DIRECTORSThe Directors during the Year and up to the

date of this report were:

Executive Directors:

Li Lixin (Chairman)

Cheng Jianhe (Chief Executive Officer)

Jin Yaxue

Non-Executive Director:

Lau Kin Hon

Independent Non-Executive Directors:

He Chengying

Shin Yick Fabian

Cheung Kiu Cho, Vincent

DIRECTORS’ REPORT


In accordance with bye- laws 87 of the

Company’s bye-laws, Mr Li Lixin, Mr Cheung Kiu

Cho, Vincent and Mr Shin Yick Fabian will retire

at the forthcoming annual general meeting and,

being eligible, offer themselves for re-election.

The Company has received confirmation of

independence from each of the independent

nonexecutive Directors pursuant to Rule 3.13 of

the Listing Rules and considers all the independent

non-executive Directors to be independent.

EMOLUMENTS OF DIRECTORS AND THE FIVE HIGHEST PAID INDIVIDUALS

Details of the emoluments of the Directors

and the five highest paid individuals of the Group

are set out in notes 8 and 9 to the consolidated

financial statements respectively.

DIRECTORS’ SERVICE CONTRACTSNone of the Directors who are proposed for

re-election at the forthcoming annual general

meeting has a service contract with the Company

which is not determinable within one year without

payment of compensation, other than statutory

compensation.

DIRECTORS’ AND A CONTROLLING SHAREHOLDER’S INTERESTS IN CONTRACTS

Save as set out in note 28 of the consolidated

financial statements, no contracts of significance

in relation to the Group’s business to which the

Company, its fellow subsidiaries or its holding

company, was a party and in which a Director had

a material interest, whether directly or indirectly,

subsisted at the end of the Year or at any time

during the Year.

CONNECTED TRANSACTIONSDetails of continuing connected transactions

for the year ended 31 March 2016:

(a) Lease of properties

(i) Lease agreement signed with Da Mei

(N ingbo) New Mater ia l s Company

Limited

Pursuant to a lease agreement signed

on 31 December 2012 and renewed on

16 December 2015 between Ningbo Lisi

Household Products Company Limited

(“Ningbo Lisi”), the Company’s subsidiary,

and Da Mei (N ingbo) New Mater ia l s

Company Limited (“Da Mei”), a company

owned by Mr Li Lixin, a director and

beneficial owner of the Company, Da Mei

agreed to lease east part of its property

at 518 Cheng Xin Lu, Yinzhou Investment

and Business Incubation of Ningbo, the

People’s Republic of China (the “East

District”) to Ningbo Lisi for a term of 6

years commencing from 1 January 2013

to 31 December 2018 as its factory space

and office premises with monthly rent of

RMB537,930.

The maximum aggregate annual value

(the “Annual Cap”) of the rental expenses

and rental expenses incurred for leasing of

the East District is as follow:

Rental

Annual Cap expenses

RMB RMB

From 1 April 2015

to 31 March 2016 6,455,160 6,455,160

DIRECTORS’ REPORT


(ii) Lease agreement signed with Ningbo

Lisi Electrical Appliances Manufacturing

Company Limited

Pursuant to a lease agreement signed

on 30 May 2012 and renewed on 29 May

2015 between Ningbo Lisi, the Company’s

subs id iary , and Ningbo L is i E lectr ica l

Appliances Manufacturing Company Limited

(“NLEAM”), a company owned by Mr Li

Lixin, a director and beneficial owner of

the Company, NLEAM agreed to lease west

part of its property at 518 Cheng Xin Lu,

Yinzhou Investment and Business Incubation

of Ningbo, the People’s Republic of China

(the “West District”) to Ningbo Lisi for a

term of 6 years commencing from 1 June

2012 to 31 May 2018 as its factory space

and office premises with monthly rent of

RMB635,100.

The Annual Cap of the rental expenses

and rental expenses incurred for leasing of

the West District is as follows:

Rental

Annual Cap expenses

RMB RMB

From 1 April 2015

to 31 March 2016 7,621,200 7,621,200

(b) Export agency services

Pursuant to an export agency agreement

signed on 31 December 2012 and renewed

on 16 December 2015 between Ningbo Lisi

and Lisi Import and Export Company Limited

(“Lisi I&E”), a company owned by Mr Li

Lixin, a director and beneficial owner of the

Company, Lisi I&E agreed to provide Ningbo

Lisi export agency services which include

assisting Ningbo Lisi on handling government

applications, settlement services and other

liaison services between local government

departments and the customers for a term of 6

years commencing from 1 January 2013 to 31

December 2018.

The Annual Cap of the export agency

service fee and the amount of export agency

fee incurred for the provision of export agency

is as follow:

Annual Export

Cap agency fee

RMB RMB

From 1 April 2015

to 31 March 2016 8,500,000 3,735,200

DIRECTORS’ REPORT


(c) Import agency services

Pursuant to an import agency agreement

signed on 31 December 2012 and renewed

on 16 December 2015 between Ningbo Lisi

and Lisi I&E, Lisi I&E agreed to provide Ningbo

Lisi import agency services for a term of 6

years commencing from 1 January 2013 to 31

December 2018. The import agency services

include assisting Ningbo Lisi on handling

government applications, settlement services

and the provision of guarantees in respect of

payment obligations under raw materials or

goods purchase contracts entered into between

Ningbo Lisi with other third parties.

The Annual Cap of the gross transaction

amount for the provision of Import agency

service, gross transaction amount and the

amount of import agency fee incurred for raw

material purchased is as follow:

Gross Import

Annual transaction agency fee

Cap amount incurred

RMB RMB RMB

From 1 April 2015

to 31 March 2016 156,000,000 73,782,944 442,698

(d) Mutual supply of products

Pursuant to a mutual supply framework

agreement signed on 5 March 2013 and

renewed on 16 December 2015 between New

JoySun Corp. (for itself and on behalf of its

subsidiaries), the Company’s subsidiary, and

Lisi Group Co. Ltd. (for itself and on behalf

of its subsidiaries), a company owned by Mr

Li Lixin, a director and beneficial owner of

the Company, it was agreed that members of

the group of New JoySun Corp. will supply

to members of the group of Lisi Group Co.

Ltd. electrical appliance products, food and

beverage products and var ious domest ic

products, and reciprocally, members of the

group of Lisi Group Co. Ltd. will supply to

members of the group of New JoySun Corp.

household products. The term of the mutual

supply agreement is commencing from 5 March

2013 to 31 December 2018. Subsidiaries from

both sides will enter into individual supply

contracts with the pricing of the products

transacted and the payment terms determined

and negotiated based on normal commercial

terms, with reference to the prevailing fair

market prices of comparable products and no

less favorable than those offered to or from

members of the group of New JoySun Corp. by

or to independent third parties.

DIRECTORS’ REPORT


The annual caps for the leasing transactions

contemplated under the mutua l supp ly

framework agreement are as follows:

Annual Transaction Annual Transaction

Cap amount Cap amount

From From From From

1 January 1 April 1 January 1 January

2015 to 2015 to 2016 to 2016 to

31 December 31 December 31 March 31 March

2015 2015 2016 2016

RMB RMB RMB RMB

Supply of products 81,100,000 1,735,000 1,200,000 399,713

from the group

of New JoySun

Corp. to the

group of Lisi

Group Co. Ltd.

Supply of products 35,000,000 19,841 300,000 –

from the group

of Lisi Group

Co. Ltd. to

the group of

New JoySun Corp.

(e) Sales of products to Sanjiang Shopping

Club Co., Ltd.

Pursuant to the procurement and sales

agreements dated 24 June 2015 between New

JoySun Corp. (“New JoySun”) (as supplier), the

Company’s subsidiary, and Sanjiang Shopping

Club Co., Ltd. (“Sanjiang Club”) (as purchaser),

a connected person of the Company and

holding 18% equity interest in New JoySun

Supermarket Chain Limited which is an 82%

owned subsidiary of the Company, it was

agreed that New JoySun will sell commodities

which essentially comprise alcoholic products

to Sanjiang Club. Each transaction will be

effected by the relevant purchase order to

be entered into between the parties with the

pricing of the commodities not being higher

than the price offered by New JoySun to any

third party. The term of the procurement and

sales agreement is commencing from 1 January

2015 and ended on 31 December 2015. And

New JoySun and Sanjiang Club could continue

to enter into transactions on the same terms

and conditions of the procurement and sales

agreement after expiry of the procurement and

sales agreement until further agreed by the

parties. On 31 December 2015, the Company

announced that the transaction between New

JoySun and Sanjiang Club will continue for the

year ending 31 December 2016 with Annual

Cap of RMB25,000,000.

The annual cap for the sales of products are

as follow:

Annual Transaction Annual Transaction

Cap amount Cap amount

From From From From

1 January 1 April 1 January 1 January

2015 to 2015 to 2016 to 2016 to

31 December 31 December 31 December 31 March

2015 2015 2016 2016

RMB RMB RMB RMB

Sales of products to 34,125,000 16,773,398 25,000,000 14,365,702

Sanjiang Shopping

Club Co., Ltd.

DIRECTORS’ REPORT


The agreements of (a)(i), (b) and (c) for the

continuing connected transactions listed above

were approved by the independent shareholders of

the Company in the special general meeting on 26

February 2013 and 15 February 2016.

The agreements of (d) were approved by

the independent shareholders of the Company

in the special general meeting on 7 June 2013

and is subject to reporting and announcement

requirements and annual review requirement

but is exempted from independent shareholders’

approval requirement which was approved by

the Board on 16 December 2015. The agreement

of (a)( i i ) , which is subject to reporting and

announcement requirements and annual review

requirement but is exempted from independent

shareholders’ approval requirement, was approved

by the Board on 30 May 2012 and 29 May 2015.

The agreements of (e), which are subject to

reporting and announcement requirements and

annual review requirement but are exempted

from the independent shareholders’ approval

requirement, were approved by the Board on 24

June 2015 and 31 December 2015 respectively.

Having reviewed the Continuing Connected

Transactions, the independent non-executive

Directors , pursuant to Rule 14A.54 of the

Listing Rules on the requirement to carry out

an annual review on all continuing connected

transactions, other than fully exempt continuing

connected transactions under the Listing Rules (if

any), confirmed that the continuing connected

transactions were made in the ordinary and usual

course of business of the Company, were made on

normal commercial terms and in accordance with

the relevant agreements governing the continuing

connected transactions on terms that were fair and

reasonable and in the interests of the shareholders

as a whole.

The Company’s auditor was engaged to report

on the Group’s continuing connected transactions

in accordance with Hong Kong Standard on

Assurance Engagements 3000 (Revised) “Assurance

Engagements Other Than Audits or Reviews

of Historical Financial Information” and with

reference to Practice Note 740 “Auditor’s letter

on Continuing Connected Transactions under the

Hong Kong Listing Rules” issued by the Hong

Kong Institute of Certified Public Accountants. The

auditor had issued its unqualified letter containing

their findings and conclusions in respect of the

continuing connected transactions in accordance

with Rule 14A.56 of the Listing Rules. A copy of

the auditor’s letter had been submitted by the

Company to the Stock Exchange.

Pursuant to Rule 14A.56 of the Listing Rules,

the auditor of the Company confirmed that the

Continuing Connected Transactions:

(1) had received the approval of the Board;

(2) had been in accordance with the pricing

policies of the Group or the comparable

t r a n s a c t i o n s a s i d e n t i f i e d b y t h e

Management;

(3) had been entered into in accordance with

the relevant agreements governing the

continuing connection transactions; and

(4) with respect of the disclosed continuing

connected transactions (a) to (e) listed

above, had not exceeded the Annual Cap

disclosed in the previous announcements

dated 30 May 2012, 31 December 2012,

29 May 2015, 24 June 2015, 16 December

2015, 31 December 2015 and circular dated

22 May 2013.

DIRECTORS’ REPORT


Save as mentioned above, there was no other

disclosable non-exempted connected transaction

or non-exempted continuing connected transaction

under the Listing Rules during the Year.

Related party transactions, including the

Continuing Connected Transactions, entered into

by the Group for the Year are disclosed in note 28

to the consolidated financial statements.

To the extent of the related party transactions

as disclosed in note 28 to the consolidated

financial statements which constituted continuing

connected t ransact ions , the Company had

complied with the disclosure requirements under

Chapter 14A of the Listing Rules during the Year

save as otherwise provided herein.

DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 31 March 2016, the interests and short

positions of the directors and chief executives of

the Company in the shares, underlying shares and

debentures of the Company and its associated

corporations (within the meaning of Part XV of

the Securities and Futures Ordinance (the “SFO”))

as recorded in the register maintained by the

Company pursuant to Section 352 of the SFO, or

as otherwise notified to the Company pursuant

to the Model Code for Securities Transactions by

Directors of Listed Companies (the “Model Code”)

were as follows:

Approximate

percentage

Number of the issued

of shares/ share capital

underlying of the

Name Capacity shares Company

(Note 1)

Mr Li Lixin Note 2 2,843,631,680 (L) 62.07%

2,705,371,679 (S) 59.05%

Note 1: (L) denotes long positions (S) denotes short

positions

Note 2: Mr Li Lixin’s interest in 2,843,631,680

shares is held as to 9,822,000 shares

personally, 19,258,000 shares through

his spouse Jin Yaer, 1,332,139,014 shares

through B ig-Max Manufactur ing Co. ,

Limited (“Big-Max”) and 1,482,412,666

shares through Shi Hui Holdings Limited

wh i ch i s who l l y -owned by B ig -Max .

The issued share capital of Big-Max is

beneficially owned as to 90% by Mr Li Lixin

and as to 10% by his spouse, Jin Yaer.

Furthermore, no share options had been

granted under the Company’s share option

scheme since its adoption on 31 August 2012

and there were no other options outstanding at

the beginning or the end of the period ended

31 March 2016. Other than that, at no time

during the period ended 31 March 2016 was the

Company or any of its subsidiaries a party to any

arrangements to enable the directors to acquire

benefits by means of the acquisition of share in,

or debentures of, the Company or any other body

corporate and none of the directors, their spouses

or children under the age of 18 have any right

to subscribe for the securities of the Company,

or had exercised any such right during the period

ended 31 March 2016.

DIRECTORS’ REPORT


Save as disclosed herein, as at 31 March 2016,

none of the Directors or chief executives of the

Company had any interests or short positions in

the shares, underlying shares or debentures of

the Company or any of its associated corporations

(within the meaning of Part XV of the SFO) as

recorded in the register required to be kept under

Section 352 of the SFO or as otherwise notified to

the Company pursuant to the Model Code.

Share option scheme

The company adopted a share option scheme

(the “Scheme”) on 31 August 2012, the particulars

of the Scheme are as follows:

Purpose of the Scheme:

To reward Participants who have contributed to

the Group and to provide incentives to Participants

to work towards the success of the Company.

Participants:

(a) any full-time or part-time employee of any

member of the Group; (b) any consultant or adviser

of any member of the Group; (c) any director

(including executive, non-executive or independent

non-executive directors) of any member of the

Group; (d) any shareholder of any member of the

Group; or (e) any distributor, contractor, supplier,

agent, customer, business partner or service

provider of any member of the Group.

Total number of ordinary shares available for issue

and the percentage of the issued share capital that

it represents as at the date of the annual report:

247,696,379 ordinary shares (10% of the

issued share capital of the Company at the date of

approval of the refreshed Scheme Mandate Limit).

Maximum entitlement of each participant:

Shall not exceed 1% of the aggregate number

of ordinary shares issued and issuable under the

Scheme.

Period within which the securities must be taken

up as an option:

No option will be exercisable later than 10

years after its date of grant.

Minimum holding period before an option can be

exercised:

Will be defined by Directors based on grantee’s

seniority and other relevant factors.

Period within which payments or loans must be

made or repaid:

Not applicable

Basis of determining the exercise price:

Determined by the Board and shall be:

(1) the closing price of the shares as stated in the

Stock Exchange’s daily quotations sheets on

the date of offer; and

(2) the average of closing price of the shares as

stated in the Stock Exchange’s daily quotations

sheets for the five business days immediately

preceding the date of offer,

whichever is higher provided that it shall not be

lower than the nominal value of the shares.

The remaining life of the Scheme:

The Scheme remains in force until 31 August

2022.

No share options had been granted under the

Scheme up to 31 March 2016 and there were no

other options outstanding at the beginning or at

the end of the Year.

Saved as disclosed above, at no time during the

Year was the Company or any of its subsidiaries, a

party to any arrangements to enable the Directors

to acquire benefits by means of the acquisition of

shares in, or debentures of, the Company or any

other body corporate and none of the Directors,

their spouses or their children under the age of 18

have any right to subscribe for the securities of the

Company, or had exercised any such right during

the Year.

DIRECTORS’ REPORT


SUBSTANTIAL SHAREHOLDERSAs at 31 March 2016, the interests or short

positions of every person, other than a director or

chief executive of the Company, in the shares and

underlying shares of the Company as recorded in

the register required to be kept under section 336

of the SFO were as follows:

Name CapacityNumber of shares/underlying shares

(Note)

Approximatepercentage of

the issued share capital

of the Company

China Cinda (HK) Holdings Company Limited

Interest in controlled corporation

1,457,482,681 (L) 31.81%

China Cinda Foundation Management Company Limited


1,457,482,681 (L) 31.81%

Cinda General Partner Limited


1,457,482,681 (L) 31.81%

Cinda International Holdings Limited


1,457,482,681 (L) 31.81%

Cinda Retail and Consumer Fund L.P.

Beneficial owner/ beneficiary of a trust

1,457,482,681 (L) 31.81%

Cinda Strategic (BVI) Limited


1,457,482,681 (L) 31.81%

Rainbow Stone Investments Limited


1,457,482,681 (L) 31.81%

Sinoday Limited Interest in controlled corporation

1,457,482,681 (L) 31.81%

中國信達資產管理股份有限公司(China Cinda Asset ManagementCo., Ltd.)


1,457,482,681 (L) 31.81%

Name CapacityNumber of shares/underlying shares

(Note)

Approximatepercentage of

the issued share capital

of the Company

Central Huijin Investment Ltd.

Person having a security interest in shares/interest in controlled corporation

1,507,667,014 (L) 32.91%

China Construction Bank Corporation

Person having a security interest in shares/interest in controlled corporation

1,507,677,014 (L) 32.91%

Cinda (BVI) Limited Interest in controlled corporation

1,350,493,014 (L) 29.48%

Cinda International Securities Limited

Trustee (other than a bare trustee)

1,350,493,014 (L) 29.48%

HNW Investment Fund Series SPC acting for and on behalf of Benefit Segregated Portfolio

Beneficial owner/ person having a security interest in shares

1,371,191,014 (L) 29.93%

Note: (L) denotes long positions

DIRECTORS’ REPORT


MANAGEMENT CONTRACTSNo contract concerning the management and

administration of the whole or any substantial part

of the business of the Company was entered into

or existed during the Year.

MAJOR CUSTOMERS AND SUPPLIERSThe percentages of purchases and sales for the

Year attributable to the Group’s major suppliers

and customers are as follows:

Purchases

– the largest supplier 6.4%

– five largest suppliers 19.8%

Sales

– the largest customer 13.8%

– five largest customers 28.7%

None of the Directors, their associates or any

shareholders (which, to the knowledge of the

Directors, owns more than 5% of the Company’s

share capital) had an interest in the major suppliers

or customers noted above.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries

has purchased, sold or redeemed any of the

Company’s listed securities during the Year.

SUFFICIENCY OF PUBLIC FLOATA c c o r d i n g t o t h e i n f o r m a t i o n t h a t i s

publicly available to the Company and within

the knowledge of the Directors, the Company

maintained sufficient public float at all times

during the Year.

AUDITORThe consolidated financial statements for the

Year were audited by KPMG, Certified Public

Accountants. A resolution for its reappointment as

auditor for the ensuing year is to be proposed at

the forthcoming annual general meeting.

On behalf of the Board

Li Lixin

Chairman

Hong Kong, 29 June 2016

INDEPENDENT AUDITOR’S REPORT


Independent auditor’s report to the shareholders of

Lisi Group (Holdings) Limited

(Incorporated in Bermuda with limited liability)

We have audited the consolidated financial statements of Lisi Group (Holdings) Limited (the “Company”)

and its subsidiaries (together the “Group”) set out on pages 29 to 111, which comprise the consolidated

statement of financial position as at 31 March 2016, the consolidated statement of profit or loss, the

consolidated statement of profit or loss and other comprehensive income, the consolidated statement of

changes in equity and the consolidated cash flow statement for the year then ended and a summary of

significant accounting policies and other explanatory information.

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTSThe directors of the Company are responsible for the preparation of consolidated financial statements

that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the

Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong

Companies Ordinance and for such internal control as the directors determine is necessary to enable the

preparation of consolidated financial statements that are free from material misstatement, whether due to

fraud or error.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these consolidated financial statements based on our audit.

This report is made solely to you, as a body, in accordance with Section 90 of the Bermuda Companies Act

1981, and for no other purpose. We do not assume responsibility towards or accept liability to any other

person for the contents of this report.

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong

Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditor’s judgement, including

the assessment of the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to

the entity’s preparation of the consolidated financial statements that give a true and fair view in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by the

directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

INDEPENDENT AUDITOR’S REPORT


OPINIONIn our opinion, the consolidated financial statements give a true and fair view of the financial position of

the Group as at 31 March 2016 and of the Group’s financial performance and cash flows for the year then

ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in

compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

KPMG

Certified Public Accountants

8th Floor, Prince’s Building

10 Chater Road

Central, Hong Kong

29 June 2016

CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the year ended 31 March 2016

(Expressed in Renminbi (“RMB”))


2016 2015

Note RMB’000 RMB’000

Revenue 4 1,085,709 1,158,042

Cost of sales (833,150) (897,992)

Gross profit 4(b) 252,559 260,050

Other income 5 18,976 21,076

Selling and distribution expenses (70,004) (81,345)

Administrative expenses (285,531) (113,840)

(Loss)/profit from operations (84,000) 85,941

Net valuation (loss)/gain on investment properties 13 (8,800) 17,646

Net loss on disposal of an available-for-sale investment 18 (10,687) –

Net gain on disposal of an investment property – 24,500

Net gain on disposal of an investment in a subsidiary – 1,393

Share of losses of an associate 17 (13,960) (8,800)

Finance costs 6(a) (162,361) (20,168)

(Loss)/profit before taxation 6 (279,808) 100,512

Income tax 7 304,820 (20,202)

Profit for the year 25,012 80,310

Attributable to:

Equity shareholders of the Company 24,998 82,212

Non-controlling interests 14 (1,902)


Earnings per share (RMB cent)

Basic 11(a) 0.55 1.97

Diluted 11(b) 0.55 0.61

The notes on pages 37 to 111 form part of these financial statements.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 March 2016(Expressed in RMB)



2016 2015



Other comprehensive income for the year

(after tax and reclassification adjustments): 10

Items that may be reclassified subsequently

to profit or loss:

– Available-for-sale debt securities

net movement in fair value reserve (4,774) 8,467

– Exchange differences on translation into

presentation currency 3,019 (2,771)

– Reclassification of exchange differences

on disposal of a subsidiary – (300)

Other comprehensive income for the year (1,755) 5,396

Total comprehensive income for the year 23,257 85,706

Attributable to:

Equity shareholders of the Company 23,243 87,608

Non-controlling interests 14 (1,902)

Total comprehensive income for the year 23,257 85,706

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAt 31 March 2016

(Expressed in RMB)



2016 2015


Non-current assets

Property, plant and equipment 12 865,488 880,464

Investment properties 13 425,390 434,190

Goodwill 15 43,313 43,313

Intangible assets 16 7,001 12,375

Interests in an associate 17 26,184 40,144

Available-for-sale investments 18 72,194 82,881

Deferred tax assets 26(b) 32,892 35,120

1,472,462 1,528,487

Current assets

Available-for-sale investments 18 644,924 531,289

Inventories 19 148,087 152,058

Trade and other receivables 20 718,671 1,514,397

Restricted bank deposits 21 319,416 132,974

Cash and cash equivalents 22 258,198 135,395

2,089,296 2,466,113

Current liabilities

Trade and other payables 23 506,345 527,658

Bank and other loans 24(a) 790,227 697,691

Income tax payable 26(a) 4,314 349,393

1,300,886 1,574,742

Net current assets 788,410 891,371

Total assets less current liabilities 2,260,872 2,419,858

At 31 March 2016(Expressed in RMB)


CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)


2016 2015


Non-current liabilities

Bank and other loans 24(b) 271,615 316,380

Convertible bonds 25 – 134,883

Deferred tax liabilities 26(b) 249,472 255,384

521,087 706,647

NET ASSETS 1,739,785 1,713,211

CAPITAL AND RESERVES 27

Share capital 39,374 36,138

Reserves 1,631,191 1,607,867

Total equity attributable to equity

shareholders of the Company 1,670,565 1,644,005

Non-controlling interests 69,220 69,206

TOTAL EQUITY 1,739,785 1,713,211

Approved and authorised for issue by the board of directors on 29 June 2016.

Li Lixin Cheng Jianhe

Chairman Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 31 March 2016

(Expressed in RMB)



Attributable to equity shareholders of the Company

Capital Property Fair Non-

Share Share redemption Statutory Contributed Exchange revaluation value Retained controlling Total

capital premium reserve reserves surplus reserve reserve reserve profits Total interests equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

(Note (Note (Note (Note (Note (Note (Note (Note

27(c)) 27(d)(i)) 27(d)(i)) 27(d)(ii)) 27(d)(iii)) 27(d)(iv)) 27(d)(v)) 27(d)(vi))

Balance at 1 April 2014 36,138 541,228 1,341 8,610 56,236 (17,109) 8,594 – 921,359 1,556,397 71,108 1,627,505

Changes in equity for the

year ended 31 March 2015:

Profit/(loss) for the year – – – – – – – – 82,212 82,212 (1,902) 80,310

Other comprehensive income – – – – – (3,071) – 8,467 – 5,396 – 5,396

Total comprehensive income for the year – – – – – (3,071) – 8,467 82,212 87,608 (1,902) 85,706

Transfer to retained profits

in connection with disposal

of investment property – – – – – – (8,594) – 8,594 – – –

Appropriation to reserves – – – 4,215 – – – – (4,215) – – –

– – – 4,215 – – (8,594) – 4,379 – – –

Balance at 31 March 2015 36,138 541,228 1,341 12,825 56,236 (20,180) – 8,467 1,007,950 1,644,005 69,206 1,713,211

For the year ended 31 March 2016(Expressed in RMB)


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)


Attributable to equity shareholders of the Company

Capital Fair Non-

Share Share redemption Statutory Contributed Exchange value Other Retained controlling Total

capital premium reserve reserves surplus reserve reserve reserve profits Total interests equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

(Note (Note (Note (Note (Note (Note (Note (Note

27(c)) 27(d)(i)) 27(d)(i)) 27(d)(ii)) 27(d)(iii)) 27(d)(iv)) 27(d)(vi)) 27(d)(vii))

Balance at 1 April 2015 36,138 541,228 1,341 12,825 56,236 (20,180) 8,467 – 1,007,950 1,644,005 69,206 1,713,211

Changes in equity for the year ended

31 March 2016:

Profit for the year – – – – – – – – 24,998 24,998 14 25,012

Other comprehensive income – – – – – 3,019 (4,774) – – (1,755) – (1,755)

Total comprehensive income for the year – – – – – 3,019 (4,774) – 24,998 23,243 14 23,257

Issuance of ordinary shares upon conversion of

convertible bonds (Note 27(c)) 3,236 222,158 – – – – – – – 225,394 – 225,394

Special distribution approved and

paid during the year (Note 27(b)(ii)) – (183,197) – – – – – – – (183,197) – (183,197)

Transfer between share premium accounts and

contributed surplus accounts

of the Company (Note 27(d)(iii)) – (580,189) – – 580,189 – – – – – – –

Entering into an acquisition agreement of

non-controlling interests of

a subsidiary (Note 27(d)(vii)) – – – – – – – (38,880) – (38,880) – (38,880)

Appropriation to reserves – – – 3,452 – – – – (3,452) – – –

3,236 (541,228) – 3,452 580,189 – – (38,880) (3,452) 3,317 – 3,317

Balance at 31 March 2016 39,374 – 1,341 16,277 636,425 (17,161) 3,693 (38,880) 1,029,496 1,670,565 69,220 1,739,785

CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2016

(Expressed in RMB)



2016 2015


Operating activities

(Loss)/profit before taxation (279,808) 100,512

Adjustments for:

Depreciation and amortisation 6(c) 56,018 51,572

Net loss/(gain) on disposal of property,

plant and equipment 5 271 (5,037)

Net loss on disposal of an

available-for-sale investment 18 10,687 –

Net gain on disposal of an investment property – (24,500)

Net gain on disposal of an investment in a subsidiary – (1,393)

Interest income on cash at bank and

advances due from related parties 5 (14,048) (10,461)

Net valuation loss/(gain) on investment properties 13 8,800 (17,646)

Finance costs 6(a) 162,361 20,168

Share of losses of an associate 13,960 8,800

Impairment losses on trade and other receivables 6(c) 50,000 –

Net foreign exchange loss 12,666 –

Investment and dividend income 4(a) (34,936) (26,152)

Changes in working capital:

Decrease in inventories 3,971 7,475

Decrease/(increase) in trade and other receivables 22,322 (26,759)

(Decrease)/increase in trade and other payables (10,114) 93,068

Cash generated from operations 2,150 169,647

The People’s Republic of China (the “PRC”) Income Tax paid 26(a) (42,352) (13,831)

Net cash (used in)/generated from operating activities (40,202) 155,816

Investing activities

Proceeds from disposal of investment in a subsidiary – 1,500

Payments for the purchase of available-for-sale investments (640,000) (520,000)

Proceeds from sale of available-for-sale investments 520,000 252,000

Payments for purchase of property, plant and

equipment and investment properties (43,506) (151,841)

Proceeds from disposal of property, plant and equipment 1,260 8,153

Proceeds from disposal of an investment property 612,360 534,600

Net increase in restricted bank deposits (186,442) (70,212)

Interest received 9,092 10,461

Investment and dividend income received 4(a) 34,936 26,152

Net cash generated from investing activities 307,700 90,813

For the year ended 31 March 2016(Expressed in RMB)


CONSOLIDATED CASH FLOW STATEMENT (Continued)

2016 2015


Financing activities

Proceeds from new bank and other loans 809,981 676,526

Repayment of bank and other loans (655,332) (756,070)

Payments for acquisitions of non-controlling interests

of a subsidiary (38,880) –

Payments for the redemptions of convertible bonds – (16,114)

Special distributions paid to the equity shareholders

of the Company (183,197) –

Finance costs paid (77,346) (70,595)

Net cash used in financing activities (144,774) (166,253)

Net increase in cash and cash equivalents 122,724 80,376

Cash and cash equivalents at 1 April 22 135,395 55,020

Effect of foreign exchange rate changes 79 (1)

Cash and cash equivalents at 31 March 22 258,198 135,395

Non-cash transaction:

During the year ended 31 March 2016, the Group has entered into an agreement with Shenzhen

City XingShun Property Development Company Limited (“XingShun Property”) to set off the loan of

RMB116,000,000 due to XingShun Property with receivable due from XingShun Property arising from the

disposal of an investment property.


NOTES TO THE FINANCIAL STATEMENTS(Expressed in RMB unless otherwise indicated)


1 CORPORATE INFORMATIONLisi Group (Holdings) Limited (the “Company”) was incorporated in Bermuda as an exempted

company with limited liability under the Bermuda Companies Act 1981. The shares of the Company

were listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 11 October

1995. The consolidated financial statements of the Company for the year ended 31 March 2016

comprise the Company and its subsidiaries (collectively referred to as the “Group”) and the Group’s

interests in an associate. The principal activities of the Group are the manufacturing and trading of

household products, the operation of department stores and supermarkets, the wholesale of wine

and beverages and electrical appliances, and investments holding.

2 SIGNIFICANT ACCOUNTING POLICIES(a) Statement of compliance

These financial statements have been prepared in accordance with all applicable Hong Kong

Financial Reporting Standards (“HKFRSs”), which collective term includes all applicable

individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards

(“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public

Accountants (the “HKICPA”), accounting principles generally accepted in Hong Kong and the

applicable disclosure requirements of the Hong Kong Companies Ordinance. These financial

statements also comply with the applicable disclosure provisions of the Rules Governing the

Listing of Securities on the Stock Exchange (the “Listing Rules”). A summary of the significant

accounting policies adopted by the Group is set out below.

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for

early adoption for the current accounting period of the Group and the Company. Note 2(c)

provides information on any changes in accounting policies resulting from initial application of

these developments to the extent that they are relevant to the Group for the current and prior

accounting periods reflected in these financial statements.

(b) Basis of preparation of the financial statements

The consolidated financial statements for the year ended 31 March 2016 comprise the Group

and the Group’s interests in an associate.

The measurement basis used in the preparation of the financial statements is the historical

cost basis except for derivative financial instruments (see Note 2(h)), available-for-sale

investments (see Note 2(g)) and investment properties (see Note 2(i)) which are stated at their

fair values.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(b) Basis of preparation of the financial statements (continued)

The preparation of financial statements in conformity with HKFRSs requires management

to make judgements, estimates and assumptions that affect the application of policies and

reported amounts of assets, liabilities, income and expenses. The estimates and associated

assumptions are based on historical experience and various other factors that are believed

to be reasonable under the circumstances, the results of which form the basis of making the

judgements about carrying values of assets and liabilities that are not readily apparent from

other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised if the

revision affects only that period, or in the period of the revision and future periods if the

revision affects both current and future periods.

Judgements made by management in the application of HKFRSs that have significant effect on

the financial statements and major sources of estimation uncertainty are discussed in Note 3.

(c) Changes in accounting policies

The HKICPA has issued the following amendments to HKFRSs that are first effective for the

current accounting period of the Group:

• Amendments to HKAS 19, Employee benefits: Defined benefit plans: Employee

contributions

• Annual Improvements to HKFRSs 2010-2012 Cycle

• Annual Improvements to HKFRSs 2011-2013 Cycle

None of these developments have had a material effect on how the Group’s results and

financial position for the current or prior periods have been prepared or presented. The Group

has not applied any new standard or interpretation that is not yet effective for the current

accounting period.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(d) Subsidiaries and non-controlling interests

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is

exposed, or has rights, to variable returns from its involvement with the entity and has the

ability to affect those returns through its power over the entity. When assessing whether

the Group has power, only substantive rights (held by the Group and other parties) are

considered.

An investment in a subsidiary is consolidated into the consolidated financial statements from

the date that control commences until the date that control ceases. Intra-group balances,

transactions and cash flows and any unrealised profits arising from intra-group transactions

are eliminated in full in preparing the consolidated financial statements. Unrealised losses

resulting from intra-group transactions are eliminated in the same way as unrealised gains but

only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity interests in a subsidiary not attributable directly

or indirectly to the Company, and in respect of which the Group has not agreed any additional

terms with the holders of those equity interests which would result in the Group as a whole

having a contractual obligation in respect of those equity interests that meets the definition of

a financial liability. For each business combination, the Group can elect to measure any non-

controlling interests either at fair value or at the non-controlling interests’ proportionate share

of the subsidiary’s net identifiable assets.

Non-controlling interests are presented in the consolidated statement of financial position

within equity, separately from the equity attributable to the equity shareholders of the

Company. Non-controlling interests in the results of the Group are presented on the face

of the consolidated statement of profit or loss and the consolidated statement of profit or

loss and other comprehensive income as an allocation of the total profit or loss and total

comprehensive income for the year between the non-controlling interests and the equity

shareholders of the Company.

Changes in the Group’s equity interests in a subsidiary that do not result in a loss of control

are accounted for as equity transactions, whereby adjustments are made to the amounts of

controlling and non-controlling interests within consolidated equity to reflect the change in

relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire

equity interests in that subsidiary, with a resulting gain or loss being recognised in the

consolidated statement of profit or loss. Any equity interest retained in that former subsidiary

at the date when control is lost is recognised at fair value and this amount is regarded as the

fair value on initial recognition of a financial asset or, when appropriate, the cost on initial

recognition of an investment in an associate (see Note 2(e)) or joint venture.

In the Company’s statement of financial position, an investment in a subsidiary is stated at

cost less impairment losses (see Note 2(n)(ii)), unless the investment is classified as held-for-

sale.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(e) Associate

An associate is an entity in which the Group has significant influence, but not control or joint

control, over its management, including participation in the financial and operating policy

decisions.

An investment in an associate is accounted for in the consolidated financial statements

under the equity method, unless it is classified as held-for-sale. Under the equity method,

the investment is initially recorded at cost, adjusted for any excess of the Group’s share of

the acquisition-date fair values of the investee’s identifiable net assets over the cost of the

investment (if any). Thereafter, the investment is adjusted for the post acquisition change

in the Group’s share of the investee’s net assets and any impairment loss relating to the

investment (see Note 2(n)(i)). Any acquisition-date excess over cost, the Group’s share of the

post-acquisition, post-tax results of the investee and any impairment losses for the year are

recognised in the consolidated statement of profit or loss, whereas the Group’s share of the

post-acquisition post-tax items of the investee’s other comprehensive income is recognised in

the consolidated statement of profit or loss and other comprehensive income.

When the Group’s share of losses exceeds its interest in the associate, the Group’s interest

is reduced to nil and recognition of further losses is discontinued except to the extent that

the Group has incurred legal or constructive obligations or made payments on behalf of the

associate. For this purpose, the Group’s interest is the carrying amount of the investment

under the equity method together with the Group’s long-term interests that in substance form

part of the Group’s net investment in the associate.

Unrealised profits and losses resulting from transactions between the Group and its associate

are eliminated to the extent of the Group’s interest in the associate, except where unrealised

losses provide evidence of an impairment of the asset transferred, in which case they are

recognised immediately in the consolidated statement of profit or loss.

When the Group ceases to have significant influence over an associate, it is accounted for as a

disposal of the entire interest in that associate, with a resulting gain or loss being recognised

in the consolidated statement of profit or loss. Any interest retained in that former associate

at the date when significant influence is lost is recognised at fair value and this amount is

regarded as the fair value on initial recognition of a finance asset.

(f) Goodwill

Goodwill represents the excess of:

(i) the aggregate of the fair value of the consideration transferred, the amount of any

non-controlling interests in the acquiree and the fair value of the Group’s previously

held equity interests in the acquiree; over

(ii) the net fair value of the acquiree’s identifiable assets and liabilities measured as at the

acquisition date.

When (ii) is greater than (i), then this excess is recognised immediately in the consolidated

statement of profit or loss as a gain on a bargain purchase.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(f) Goodwill (continued)

Goodwill is stated at cost less accumulated impairment losses (see Note 2(n)(ii)). Goodwill

arising on a business combination is allocated to each cash-generating unit, or groups of

cash-generating units, that is expected to benefit from the synergies of the combination and

is tested annually for impairment (see Note 2(n)(ii)).

(g) Other investments in debt and equity securities

Investments in debt and equity securities are initially stated at fair value, which is their

transaction price unless it is determined that the fair value at initial recognition differs from

the transaction price and that fair value is evidenced by a quoted price in an active market

for an identical asset or liability or based on a valuation technique that uses only data from

observable markets. Cost includes attributable transaction costs.

Investments in debt and equity securities which do not fall into the categories of investments

in securities held for trading and held-to-maturity are classified as available-for-sale

investments. At the end of each reporting period the fair value is remeasured, with any

resultant gain or loss being recognised in other comprehensive income and accumulated

separately in equity in the fair value reserve. As an exception to this, investments in equity

securities that do not have a quoted price in an active market for an identical instrument and

whose fair value cannot otherwise be reliably measured are recognised in the statement of

financial position at cost less impairment losses (see Note 2(n)(i)). Dividend income from equity

securities and interest income from debt securities calculated using the effective interest

method is recognised in profit or loss in accordance with the policies set out in Note 2(w)(v)

and Note 2(w)(vi), respectively.

When the investments are derecognised or impaired (see Note 2(n)(i)), the cumulative gain or

loss is reclassified from equity to profit or loss. Investments are recognised/derecognised on

the date the Group commits to purchase/sell the investments or they expire.

(h) Derivative financial instruments

Derivative financial instruments are recognised initially at fair value. At the end of each

reporting period the fair value is remeasured. The gain or loss on remeasurement to fair value

is recognised immediately in profit or loss.

(i) Investment properties

Investment properties are land and/or buildings which are owned or held under a leasehold

interest (see Note 2(l)) to earn rental income and/or for capital appreciation. These include

land held for a currently undetermined future use and property that is being constructed or

developed for future use as investment property.

Investment properties are stated at fair value, unless they are still in the course of construction

or development at the end of the reporting period and their fair value cannot be reliably

measured at that time. Any gain or loss arising from a change in fair value or from the

retirement or disposal of an investment property is recognised in profit or loss. Rental income

from investment properties is accounted for as described in Note 2(w)(iii).



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(j) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and

impairment losses (see Note 2(n)(ii)).

The cost of self-constructed items of property, plant and equipment includes the cost of

materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and

removing the items and restoring the site on which they are located, and an appropriate

proportion of production overheads and borrowing costs (see Note 2(y)).

Gains or losses arising from the retirement or disposal of an item of property, plant and

equipment are determined as the difference between the net disposal proceeds and the

carrying amount of the item and are recognised in profit or loss on the date of retirement or

disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment,

less their estimated residual values, if any, using the straight-line method over their estimated

useful lives as follows:

Estimated useful lives

Leasehold land and buildings Over the shorter of the term

of lease and their estimated useful lives

Leasehold improvements 3-10 years

Plant and machinery 5-10 years

Furniture, fixtures and equipment 3-10 years

Moulds 7-10 years

Motor vehicles 4-5 years

Where parts of an item of property, plant and equipment have different useful lives, the cost

of the item is allocated on a reasonable basis between the parts and each part is depreciated

separately. Both the estimated useful life of an asset and its residual value, if any, are

reviewed annually. No depreciation is provided in respect of construction in progress until it is

completed and ready for its intended use.

When a property held for own use becomes an investment property, the property is

remeasured to fair value and reclassified as investment property. Any gain arising on this

remeasurement is recognised in profit or loss to the extent that it reverses a previous

impairment loss on the specific property, with any remaining gain recognised in other

comprehensive income and presented in the property revaluation reserve within equity. Any

such revaluation surplus is transferred from the property revaluation reserve to retained

profits and is not reclassified to profit or loss on the date of retirement or disposal. Any loss is

recognised immediately in profit or loss.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(k) Intangible assets (other than goodwill)

Intangible assets that are acquired by the Group are stated at cost less accumulated

amortisation and impairment losses (see Note 2(n)(ii)).

Amortisation of intangible assets is charged to profit or loss on a straight-line basis over the

assets’ estimated useful lives. The following intangible assets are amortised from the date they

are available for use and their estimated useful lives are as follows:

Estimated useful lives

Customer relationships 5-6 years

Both the period and method of amortisation are reviewed annually.

(l) Leased assets

An arrangement, comprising a transaction or a series of transactions, is or contains a lease

if the Group determines that the arrangement conveys a right to use a specific asset or

assets for an agreed period of time in return for a payment or a series of payments. Such a

determination is made based on an evaluation of the substance of the arrangement and is

regardless of whether the arrangement takes the legal form of a lease.

(i) Classification of assets leased to the Group

Assets that are held by the Group under leases which transfer to the Group substantially

all the risks and rewards of ownership are classified as being held under finance leases.

Leases which do not transfer substantially all the risks and rewards of ownership to the

Group are classified as operating leases.

(ii) Assets acquired under finance leases

Where the Group acquires the use of assets under finance leases, the amounts

representing the fair value of the leased asset, or, if lower, the present value of the

minimum lease payments of such assets, are included in property, plant and equipment

and the corresponding liabilities, net of finance charges, are recorded as obligations

under finance leases. Depreciation is provided at rates which write off the cost of the

assets over the term of the relevant lease or, where it is likely the Group will obtain

ownership of the asset, the life of the asset, as set out in Note 2(j). Impairment losses

are accounted for in accordance with the accounting policy as set out in Note 2(n)(ii).

Finance charges implicit in the lease payments are charged to profit or loss over the

period of the leases so as to produce an approximately constant periodic rate of charge

on the remaining balance of the obligations for each accounting period. Contingent

rentals are charged to profit or loss in the accounting period in which they are

incurred.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(l) Leased assets (continued)

(iii) Operating lease charges

Where the Group has the use of assets held under operating leases, payments made

under the leases are charged to profit or loss in equal instalments over the accounting

periods covered by the lease term, except where an alternative basis is more

representative of the pattern of benefits to be derived from the leased asset. Lease

incentives received are recognised in profit or loss as an integral part of the aggregate

net lease payments made. Contingent rentals are charged to profit or loss in the

accounting period in which they are incurred.

The cost of acquiring land held under an operating lease is amortised on a straight-

line basis over the period of the lease term except where the property is classified as

investment property (see Note 2(i)).

(m) Trade and other receivables

Trade and other receivables are initially recognised at fair value and thereafter stated at

amortised cost using the effective interest method, less allowance for impairment of doubtful

debts (see Note 2(n)(i)), except where the receivables are interest-free loans made to related

parties without any fixed repayment terms or the effect of discounting would be immaterial.

In such cases, the receivables are stated at cost less allowance for impairment of doubtful

debts (see Note 2(n)(i)).

(n) Impairment of assets

(i) Impairment of investments in debt and equity securities and receivables

Investments in debt and equity securities and receivables that are stated at cost or

amortised cost or are classified as available-for-sale financial assets are reviewed at

the end of each reporting period to determine whether there is objective evidence of

impairment. Objective evidence of impairment includes observable data that comes to

the attention of the Group about one or more of the following loss events:

– significant financial difficulty of the debtor;

– a breach of contract, such as a default or delinquency in interest or principal

payments;

– it becoming probable that the debtor will enter bankruptcy or other financial

reorganisation;

– significant changes in the market, economic or legal environment that have an

adverse effect on the debtor; and

– a significant or prolonged decline in the fair value of an investment in an equity

instrument below its cost.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(n) Impairment of assets (continued)

(i) Impairment of investments in debt and equity securities and receivables (continued)

If any such evidence exists, any impairment loss is determined and recognised as

follows:

– for investment in an associate accounted for under the equity method in

the consolidated financial statements (see Note 2(e)), the impairment loss is

measured by comparing the recoverable amount of the investment with its

carrying amount in accordance with Note 2(n)(ii). The impairment loss is reversed

if there has been a favourable change in the estimates used to determine the

recoverable amount in accordance with Note 2(n)(ii).

– for unquoted equity securities carried at cost, the impairment loss is measured

as the difference between the carrying amount of the financial asset and the

estimated future cash flows, discounted at the current market rate of return for

a similar financial asset where the effect of discounting is material. Impairment

losses for equity securities carried at cost are not reversed.

– for trade and other receivables and other financial assets carried at amortised

cost, the impairment loss is measured as the difference between the asset’s

carrying amount and the present value of estimated future cash flows,

discounted at the financial asset’s original effective interest rate (i.e. the

effective interest rate computed at initial recognition of these assets), where

the effect of discounting is material. This assessment is made collectively where

these financial assets share similar risk characteristics, such as similar past due

status, and have not been individually assessed as impaired. Future cash flows

for financial assets which are assessed for impairment collectively are based on

historical loss experience for assets with credit risk characteristics similar to the

collective group.

If in a subsequent period the amount of an impairment loss decreases and the

decrease can be linked objectively to an event occurring after the impairment

loss was recognised, the impairment loss is reversed through profit or loss. A

reversal of an impairment loss shall not result in the asset’s carrying amount

exceeding that which would have been determined had no impairment loss been

recognised in prior years.




(i) Impairment of investments in debt and equity securities and receivables (continued)

– for available-for-sale securities, the cumulative loss that has been recognised

in the fair value reserve is reclassified to profit or loss. The amount of the

cumulative loss that is recognised in profit or loss is the difference between the

acquisition cost (net of any principal repayment and amortisation) and current

fair value, less any impairment loss on that asset previously recognised in profit

or loss.

Impairment losses recognised in profit or loss in respect of available-for-sale

equity securities are not reversed through profit or loss. Any subsequent increase

in the fair value of such assets is recognised in other comprehensive income.

Impairment losses in respect of available-for-sale debt securities are reversed

if the subsequent increase in fair value can be objectively related to an event

occurring after the impairment loss was recognised. Reversals of impairment

losses in such circumstances are recognised in profit or loss.

Impairment losses are written off against the corresponding assets directly, except for

impairment losses recognised in respect of trade and other receivables, whose recovery

is considered doubtful but not remote. In this case, the impairment losses for doubtful

debts are recorded using an allowance account. When the Group is satisfied that

recovery is remote, the amount considered irrecoverable is written off against trade

and other receivables directly and any amounts held in the allowance account relating

to that debt are reversed. Subsequent recoveries of amounts previously charged to the

allowance account are reversed against the allowance account. Other changes in the

allowance account and subsequent recoveries of amounts previously written off directly

are recognised in profit or loss.

(ii) Impairment of other assets

Internal and external sources of information are reviewed at the end of each reporting

period to identify indications that the following assets may be impaired or, except in

the case of goodwill, an impairment loss previously recognised no longer exists or may

have decreased:

– property, plant and equipment;

– pre-paid interests in leasehold land classified as being held under an operating

lease (except properties classified as investment properties);

– intangible assets;

– goodwill; and

– investments in subsidiaries in the Company’s statement of financial position.




(ii) Impairment of other assets (continued)

If any such indication exists, the asset’s recoverable amount is estimated. In addition,

the recoverable amount of goodwill is estimated annually whether or not there is any

indication of impairment.

– Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of

disposal and value in use. In assessing value in use, the estimated future cash

flows are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the risks

specific to the asset. Where an asset does not generate cash inflows largely

independent of those from other assets, the recoverable amount is determined

for the smallest group of assets that generates cash inflows independently (i.e. a

cash-generating unit).

– Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an

asset, or the cash-generating unit to which it belongs, exceeds its recoverable

amount. Impairment losses recognised in respect of cash-generating units are

allocated first to reduce the carrying amount of any goodwill allocated to the

cash-generating unit (or group of units) and then, to reduce the carrying amount

of the other assets in the unit (or group of units) on a pro rata basis, except that

the carrying value of an asset will not be reduced below its individual fair value

less costs of disposal (if measurable) or value in use (if determinable).

– Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if

there has been a favourable change in the estimates used to determine the

recoverable amount. An impairment loss in respect of goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that

would have been determined had no impairment loss been recognised in prior

years. Reversals of impairment losses are credited to profit or loss in the year in

which the reversals are recognised.




(iii) Interim financial reporting and impairment

Under the Listing Rules, the Group is required to prepare an interim financial report in

compliance with HKAS 34, Interim financial reporting, in respect of the first six months

of the financial year. At the end of the interim period, the Group applies the same

impairment testing, recognition, and reversal criteria as it would at the end of the

financial year (see Notes 2(n)(i) and 2(n)(ii)).

Impairment losses recognised in an interim period in respect of goodwill, available-for-

sale equity securities and unquoted equity securities carried at cost are not reversed in

a subsequent period. This is the case even if no loss, or a smaller loss, would have been

recognised had the impairment been assessed only at the end of the financial year to

which the interim period relates. Consequently, if the fair value of an available-for-sale

equity security increases in the remainder of the annual period, or in any other period

subsequently, the increase is recognised in other comprehensive income and not profit

or loss.

(o) Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost formula and comprises all costs of

purchase, costs of conversion and other costs incurred in bringing the inventories to their

present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the

estimated costs of completion and the estimated costs necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognised as an

expense in the period in which the related revenue is recognised. The amount of any write-

down of inventories to net realisable value and all losses of inventories are recognised as an

expense in the period the write-down or loss occurs. The amount of any reversal of any write-

down of inventories is recognised as a reduction in the amount of inventories recognised as

an expense in the period in which the reversal occurs.

(p) Convertible bonds

Convertible bonds which do not contain an equity component are accounted for as follows:

At initial recognition the derivative components of the convertible bonds are measured at

fair value (see Note 2(h)). Any excess of proceeds over the amount initially recognised as the

derivative components is recognised as the liability component. Transaction costs that relate

to the issue of the convertible bonds are allocated to the liability and derivative components

in proportion to the allocation of proceeds. The portion of the transaction costs relating to

the liability component is recognised initially as part of the liability. The portion relating to the

derivative components is recognised immediately in profit or loss.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(p) Convertible bonds (continued)

The derivative components are subsequently remeasured in accordance with Note 2(h). The

liability component is subsequently carried at amortised cost. The interest expense recognised

in profit or loss on the liability component is calculated using the effective interest method.

If the bond is converted, the carrying amounts of the derivative and liability components are

transferred to share capital and share premium as consideration for the shares issued. If the

bond is redeemed, any difference between the amount paid and the carrying amounts of both

components is recognised in profit or loss.

(q) Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction

costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised

cost with any difference between the amount initially recognised and redemption value being

recognised in profit or loss over the period of the borrowings, together with any interest and

fees payable, using the effective interest method.

(r) Trade and other payables

Trade and other payables are initially recognised at fair value and are subsequently stated at

amortised cost unless the effect of discounting would be immaterial, in which case they are

stated at cost.

(s) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks

and other financial institutions, and short-term, highly liquid investments that are readily

convertible into known amounts of cash and which are subject to an insignificant risk of

changes in value, have been with within three months of maturity at acquisition.

(t) Employee benefits

(i) Short-term employee benefits and contributions to defined contribution retirement

plans

Salaries, annual bonuses, paid annual leave, contributions to defined contribution

retirement plans and the cost of non-monetary benefits are accrued in the year in

which the associated services are rendered by employees of the Group. Where payment

or settlement is deferred and the effect would be material, these amounts are stated at

their present values.

The Group’s contributions to defined contribution retirement plans are charged to

profit or loss when incurred, except to the extent that they are included in the cost of

inventories not yet recognised as an expense or cost of construction in progress not yet

transferred to property, plant and equipment.

(ii) Termination benefits

Termination benefits are recognised at the earlier of when the Group can no longer

withdraw the offer of those benefits and when it recognises restructuring costs

involving the payment of termination benefits.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(u) Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and

liabilities. Current tax and movements in deferred tax assets and liabilities are recognised

in profit or loss except to the extent that they relate to business combinations, or items

recognised in other comprehensive income or directly in equity, in which case the relevant

amounts of tax are recognised in other comprehensive income or directly in equity,

respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates

enacted or substantively enacted at the end of the reporting period, and any adjustment to

tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences

respectively, being the differences between the carrying amounts of assets and liabilities for

financial reporting purposes and their tax bases. Deferred tax assets also arise from unused

tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets

to the extent that it is probable that future taxable profits will be available against which the

asset can be utilised, are recognised. Future taxable profits that may support the recognition

of deferred tax assets arising from deductible temporary differences include those that will

arise from the reversal of existing taxable temporary differences, provided those differences

relate to the same taxation authority and the same taxable entity, and are expected to reverse

either in the same period as the expected reversal of the deductible temporary difference or

in periods into which a tax loss arising from the deferred tax asset can be carried back or

forward. The same criteria are adopted when determining whether existing taxable temporary

differences support the recognition of deferred tax assets arising from unused tax losses and

credits, that is, those differences are taken into account if they relate to the same taxation

authority and the same taxable entity, and are expected to reverse in a period, or periods, in

which the tax loss or credit can be utilised.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary

differences arising from goodwill not deductible for tax purposes, the initial recognition of

assets or liabilities that affect neither accounting nor taxable profit (provided they are not part

of a business combination), and temporary differences relating to investments in subsidiaries

to the extent that, in the case of taxable differences, the Group controls the timing of the

reversal and it is probable that the differences will not reverse in the foreseeable future, or in

the case of deductible differences, unless it is probable that they will reverse in the future.

Where investment properties are carried at their fair value in accordance with the accounting

policy set out in Note 2(i), the amount of deferred tax recognised is measured using the tax

rates that would apply on sale of those assets at their carrying value at the reporting date

unless the property is depreciable and is held within a business model whose objectives is to

consume substantially all of the economic benefits embodied in the property over time, rather

than through sale. In all other cases, the amount of deferred tax recognised is measured based

on the expected manner of realisation or settlement of the carrying amount of the assets and

liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are not discounted.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(u) Income tax (continued)

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period

and is reduced to the extent that it is no longer probable that sufficient taxable profits will be

available to allow the related tax benefit to be utilised. Any such reduction is reversed to the

extent that it becomes probable that sufficient taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented

separately from each other and are not offset. Current tax assets are offset against current tax

liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group

has the legally enforceable right to set off current tax assets against current tax liabilities and

the following additional conditions are met:

– in the case of current tax assets and liabilities, the Company or the Group intends

either to settle on a net basis, or to realise the asset and settle the liability

simultaneously; or

– in the case of deferred tax assets and liabilities, if they relate to income taxes levied by

the same taxation authority on either:

– the same taxable entity; or

– different taxable entities, which, in each future period in which significant

amounts of deferred tax liabilities or assets are expected to be settled or

recovered, intend to realise the current tax assets and settle the current tax

liabilities on a net basis or realise and settle simultaneously.

(v) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Group or

the Company has a legal or constructive obligation arising as a result of a past event, it is

probable that an outflow of economic benefits will be required to settle the obligation and

a reliable estimate can be made. Where the time value of money is material, provisions are

stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount

cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the

probability of outflow of economic benefits is remote. Possible obligations, whose existence

will only be confirmed by the occurrence or non-occurrence of one or more future events are

also disclosed as contingent liabilities unless the probability of outflow of economic benefits is

remote.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(w) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it

is probable that the economic benefits will flow to the Group and the revenue and costs, if

applicable, can be measured reliably, revenue is recognised in profit or loss as follows:

(i) Sale of goods and net income from concession sales

Revenue arising from the sale of goods and net income from concession sales are

recognised when the customer has accepted the goods and the related risks and

rewards of ownership. Revenue or net income excludes value added tax or other

sales tax and is after deduction of any sales discounts. No revenue or net income is

recognised if there are significant uncertainties regarding recovery of the consideration

due, the possible return of goods, or continuing management involvement with the

goods.

(ii) Service fee income

Service fee income from the operation of department stores and supermarkets is

recognised when the related services are rendered.

(iii) Rental income from operating leases

Rental income receivable under operating leases is recognised in profit or loss in equal

instalments over the periods covered by the lease term, except where an alternative

basis is more representative of the pattern of benefits to be derived from the use of

the leased asset. Lease incentives granted are recognised in profit or loss as an integral

part of the aggregate net lease payments receivable. Contingent rentals are recognised

as income in the accounting period in which they are earned.

(iv) Customer loyalty programme

The Group’s customer loyalty programme awards customers credits which entitle

the customers to the right to exchange for programme credits. The fair value of the

consideration received or receivable in respect of the initial sale is allocated between

the programme credits and the other components of the sale. The amount allocated

to the programme credits is estimated by reference to the fair value of the right to

exchange for programme credits offered under the customer loyalty programme,

adjusted to take into account the expected forfeiture rate. Such amount is deferred

and revenue is recognised when the programme credits are redeemed and the Group

has fulfilled its obligations to supply the programme credits offered under the customer

loyalty programme. Deferred revenue is also released to revenue when it is no longer

considered probable that the programme credits will be redeemed.

(v) Dividends

Dividend income from unlisted investments is recognised when the shareholder’s right

to receive payment is established.

(vi) Interest income

Interest income is recognised as it accrues using the effective interest method.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(w) Revenue recognition (continued)

(vii) Government grants

Government grants are recognised in the statement of financial position initially when

there is reasonable assurance that they will be received and that the Group will comply

with the conditions attaching to them. Grants that compensate the Group for expenses

incurred are recognised as income in profit or loss on a systematic basis in the same

periods in which the expenses are incurred. Grants that compensate the Group for the

cost of an asset are deducted from the carrying amount of the asset and consequently

are effectively recognised in profit or loss over the useful life of the asset by way of

reduced depreciation expenses.

(x) Translation of foreign currencies

Foreign currency transactions are translated into the functional currency of the entity to which

they relate at the foreign exchange rates ruling at the transaction dates. Monetary assets and

liabilities denominated in foreign currencies are translated into the functional currency of the

entity to which they relate at the foreign exchange rates ruling at the end of the reporting

period. Exchange gains and losses are recognised in profit or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign

currency are translated into the functional currency of the entity to which they relate using

the foreign exchange rates ruling at the transaction dates.

The results of operations which have a functional currency other than RMB are translated

into RMB at the exchange rates approximating the foreign exchange rates at the dates of

the transactions. Statement of financial position items are translated into RMB at the closing

foreign exchange rates ruling at the end of the reporting period. The resulting exchange

differences are recognised in other comprehensive income and accumulated separately in

equity in the exchange reserve.

(y) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of

an asset which necessarily takes a substantial period of time to get ready for its intended use

or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in

the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences

when expenditure for the asset is being incurred, borrowing costs are being incurred and

activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation of borrowing costs is suspended or ceases when substantially all the activities

necessary to prepare the qualifying asset for its intended use or sale are interrupted or

completed.



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(z) Related parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same group.

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(aa) Segment reportingOperating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.



3 ACCOUNTING JUDGEMENTS AND ESTIMATESNotes 13, 15 and 31 contain information about the assumptions and their risk factors relating to

valuation of investment properties, goodwill impairment and fair value of financial instruments. Other

key sources of estimation uncertainty are as follows:

(a) Impairment of receivables

The management maintains an allowance for doubtful accounts for estimated losses resulting

from the inability of the customers and debtors to make the required payments. The

management bases the estimates on the ageing of the individual receivable balance, customer

and debtor credit-worthiness and historical write-off experience. If the financial condition

of the customers or debtors were to deteriorate, actual write-offs would be higher than

estimated.

(b) Impairment of assets

If circumstances indicate that the carrying amount of an asset may not be recoverable, the

asset may be considered “impaired”, and an impairment loss may be recognised in accordance

with accounting policy for impairment of assets as described in Note 2(n). The carrying

amounts of assets are reviewed and tested for impairment, where applicable, periodically

or whenever the events or changes in circumstances indicate that their recorded carrying

amounts may not be recoverable. When such a decline has occurred, the carrying amount

is reduced to recoverable amount. The recoverable amount is the greater of the fair value

less costs of disposal and value in use. In determining the value in use, expected future cash

flows generated by the asset are discounted to their present value, which requires significant

judgement relating to the level of revenue and amount of operating costs. The Group uses

all readily available information in determining an amount that is a reasonable approximation

of the recoverable amount, including estimates based on reasonable and supportable

assumptions and projections of the level of revenue and amount of operating costs. Changes

in these estimates could have a significant impact on the carrying value of the assets and

could result in additional impairment charge or reversal of impairment in future periods,

where applicable.

(c) Depreciation and amortisation

Property, plant and equipment and intangible assets are depreciated or amortised on a

straight-line basis over the estimated useful lives of the assets, after taking into account the

estimated residual values, if any. The management reviews the estimated useful lives and the

residual values, if any, of the assets regularly in order to determine the amount of depreciation

and amortisation expenses to be recorded during any reporting period. The determination of

the useful lives and the residual values, if any, are based on historical experience with similar

assets. The depreciation and amortisation expenses for future periods are adjusted if there are

significant changes from previous estimates.

(d) Deferred tax

Deferred tax assets are recognised for unused tax losses and deductible temporary differences

to the extent that it is probable that future taxable profits will be available against which the

deferred tax assets can be utilised. In determining the amount of deferred tax assets to be

recognised, significant judgement is required relating to the timing and level of future taxable

profits, after taking into account future tax planning strategies. The amount of deferred tax

assets recognised at future dates are adjusted if there are significant changes from these

estimates.



4 REVENUE AND SEGMENT REPORTING(a) Revenue

The principal activities of the Group are the manufacturing and trading of household products,

the operation of department stores and supermarkets, the wholesale of wine and beverages

and electrical appliances, and investments holding.

The amount of each significant category of revenue and net income recognised during the

year is as follows:

2016 2015

RMB’000 RMB’000

Sales of goods:

– manufacturing and trading of household products 369,387 401,075

– retail operation of department stores and supermarkets 316,126 330,236

– wholesale of wine and beverages and electrical appliances 257,637 289,639

943,150 1,020,950

Net income from concession sales# 17,071 22,963

Rental income from operating leases 35,350 36,571

Service fee income 55,202 51,406

Investment and dividend income 34,936 26,152

1,085,709 1,158,042

# The gross revenue arising from concession sales charged to retailed customer for the year ended

31 March 2016 is RMB124,697,000 (2015: RMB164,551,000).

Information on revenue from external customers contributing over 10% of the Group’s

revenue, which arose from the manufacturing and trading of household products business, is

as follows:

2016 2015

RMB’000 RMB’000

Customer A 130,555 135,159

In respect of the Group’s retail operation of department stores and supermarkets and

wholesale of wine and beverages and electrical appliances, the directors of the Company

consider that the customer bases are diversified and have no customer with whom

transactions have exceeded 10% of the Group’s revenue for the years ended 31 March 2016

and 2015.

Details of concentrations of credit risk are set out in Note 31(a).

Further details regarding the Group’s principal activities are disclosed below.



4 REVENUE AND SEGMENT REPORTING (CONTINUED)(b) Segment reporting

The Group manages its business by lines of business. In a manner consistent with the way in

which information is reported internally to the Group’s most senior executive management for

the purposes of resource allocation and performance assessment, the Group has presented

the following four reportable segments:

– Manufacturing and trading: this segment manufactures and trades plastic and metallic

household products.

– Retail: this segment manages the department stores and supermarket operations.

– Wholesale: this segment carries out the wholesale of wine and beverages and electrical

appliances business.

– Investments holding: this segment manages the investments in debt and equity

securities.

No operating segments have been aggregated to form the above reportable segments.

(i) Segment results

For the purposes of assessing segment performance and allocating resources between

segments, the Group’s most senior executive management monitors the results

attributable to each reportable segment on the following bases:

Revenue and net income are allocated to the reportable segments with reference to

revenue and net income generated by those segments and the expenses incurred

by those segments. Inter-segment sales are priced with reference to prices charged

to external parties for similar products or services. Other than inter-segment sales,

assistance provided by one segment to another is not measured.

The measure used for reporting segment result is gross profit. The Group’s operating

expenses such as selling and distribution expenses and administrative expenses, and

assets and liabilities are not monitored by the Group’s senior executive management

based on segment. Accordingly, neither information on segment assets and liabilities

nor information concerning capital expenditure, interest income not derived from

investment in debt securities and interest expenses is presented.



4 REVENUE AND SEGMENT REPORTING (CONTINUED)(b) Segment reporting (continued)

(i) Segment results (continued)

Information regarding the Group’s reportable segments as provided to the Group’s

most senior executive management for the purposes of resource allocation and

assessment of segment performance for the years ended 31 March 2016 and 2015 is

set out below.

2016

Manufacturing Investments

and trading Retail Wholesale holding Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Revenue and net income

from external customers 369,387 422,086 258,599 34,936 1,085,008

Inter-segment revenue – – 3,437 – 3,437

Reportable segment revenue

and net income 369,387 422,086 262,036 34,936 1,088,445

Reportable segment

gross profit 104,023 99,005 13,894 34,936 251,858

2015

Manufacturing Investments

and trading Retail Wholesale holding Total



from external customers 401,075 437,747 292,304 26,152 1,157,278

Inter-segment revenue – – 5,193 – 5,193

Reportable segment revenue

and net income 401,075 437,747 297,497 26,152 1,162,471

Reportable segment gross profit 91,108 105,500 37,441 26,152 260,201




(ii) Reconciliations of reportable segment revenue and net income

2016 2015

RMB’000 RMB’000


Reportable segment revenue and net income 1,088,445 1,162,471

Elimination of inter-segment revenue (3,437) (5,193)

Unallocated revenue 701 764

Consolidated revenue 1,085,709 1,158,042

Gross profit

Reportable segment gross profit 251,858 260,201

Gross gain/(loss) of unallocated items 701 (151)

Consolidated gross profit 252,559 260,050

(iii) Geographic information

The following table sets out information about the geographical location of (i) the

Group’s revenue and net income from external customers and (ii) the Group’s property,

plant and equipment, investment properties, intangible assets, goodwill and available-

for-sale investments (together as “specified non-current assets”). The geographical

location of customers is based on the location at which the services were provided

or the goods were delivered. The geographical location of the specified non-current

assets is based on the physical location of the assets, in the case of property, plant

and equipment and investment properties, and the location of the operations to which

they are allocated, in the case of intangible assets, goodwill and available-for-sale

investments.




(iii) Geographic information (continued)

Revenue and net income Specified

from external customers non-current assets

2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

The PRC (including

Hong Kong)

(place of domicile) 721,608 761,751 1,413,386 1,453,223

The United States 308,910 347,043 – –

Europe 17,184 12,390 – –

Canada 10,467 13,594 – –

Others 27,540 23,264 – –

1,085,709 1,158,042 1,413,386 1,453,223

5 OTHER INCOME

2016 2015

RMB’000 RMB’000

Interest income on cash at bank and advances due

from related parties 14,048 10,461

Government grants 2,814 3,937

Net gain from sale of scrap materials 394 542

Net (loss)/gain on disposal of property, plant and equipment (271) 5,037

Others 1,991 1,099

18,976 21,076



6 (LOSS)/PROFIT BEFORE TAXATION(Loss)/profit before taxation is arrived at after charging/(crediting):

(a) Finance costs

2016 2015

RMB’000 RMB’000

Interest on bank and other borrowings 58,203 66,168

Finance charges on convertible bonds (Note 25) 1,649 9,427

Bank charges and other finance costs 11,962 7,816

Total borrowing costs 71,814 83,411

Changes in fair value on the derivative components

of convertible bonds (Note 25) 90,547 (57,024)

Net gain on redemption of convertible bonds – (6,219)

162,361 20,168

No borrowing costs have been capitalised for the year ended 31 March 2016 (2015: RMBNil).

(b) Staff costs#

2016 2015

RMB’000 RMB’000

Salaries, wages and other benefits 118,902 126,661

Contributions to defined contribution retirement plans 6,839 8,372

125,741 135,033

The employees of the subsidiaries of the Group established in the PRC participate in defined

contribution retirement benefit schemes managed by the local government authorities,

whereby these subsidiaries are required to contribute to the schemes at 14% of the

employees’ basic salaries. Employees of these subsidiaries are entitled to retirement benefits,

calculated based on a percentage of the average salaries level in the PRC, from the above mentioned retirement schemes at their normal retirement age.

The Group also operates a Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Scheme Ordinance for employees under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution retirement plan administered by an independent trustee. Under the MPF Scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant salaries, subject to a cap of monthly relevant salaries of HK$30,000 (HK$25,000 prior to June 2014). Contributions to the MPF Scheme vest immediately.

The Group has no further obligation for payment of other retirement benefits beyond the

above annual contributions.



6 (LOSS)/PROFIT BEFORE TAXATION (CONTINUED)(c) Other items

2016 2015

RMB’000 RMB’000

Cost of inventories# (Note 19) 807,927 869,525

Auditors’ remuneration

– statutory audit service 1,800 1,800

– other services related to disposal of investment property – 500

Depreciation and amortisation# (Notes 12 and 16) 56,018 51,572

Impairment losses on trade and other receivables

(Note 20(ii)) 50,000 –

Operating lease charges in respect of properties 35,257 40,280

Net foreign exchange loss/(gain) 12,787 (527)

# Cost of inventories includes RMB67,639,000 (2015: RMB65,031,000) for the year ended 31 March

2016, relating to staff costs, and depreciation and amortisation expenses, which amount is also

included in the respective total amounts disclosed separately above or in Note 6(b) for each of

these types of expenses.

7 INCOME TAX IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS(a) Income tax in the consolidated statement of profit or loss represents:

2016 2015

RMB’000 RMB’000

Current taxation – PRC Corporate Income Tax

(Note 26(a)):

– Provision for the year 12,018 355,216

– Over-provision in respect of prior years (Note (vi)) (314,745) (179)

(302,727) 355,037

Deferred taxation (Note 26(b)):

– Origination and reversal of temporary differences (4,186) (334,835)

– Write-down of deferred tax assets 2,093 –

(2,093) (334,835)

(304,820) 20,202



7 INCOME TAX IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS (CONTINUED)(b) Reconciliation between tax expense and accounting (loss)/profit at applicable tax rates:

2016 2015

RMB’000 RMB’000

(Loss)/profit before taxation (279,808) 100,512

Expected tax on (loss)/profit before tax, calculated at

the rates applicable to profits in the tax jurisdictions

concerned (Notes (i), (ii) and (iii)) (59,500) 20,354

Tax effect of non-deductible expenses (Note (iv)) 63,378 5,919

Tax effect of non-taxable income (131) (10,946)

Tax effect of share of losses of an associate 3,490 2,200

Tax effect of write-down of deferred tax assets

(Note (v)) 2,093 –

Tax effect of unused tax losses not recognised

(Note 26(c)) 595 2,854

Over-provision in respect of prior years (Note (vi)) (314,745) (179)

Income tax (304,820) 20,202

Notes:

(i) The Hong Kong Profits Tax rate for the year ended 31 March 2016 is 16.5% (2015: 16.5%). No

provision for Hong Kong Profits Tax has been made, as the Company and the subsidiaries of the

Group incorporated in Hong Kong did not have assessable profits subject to Hong Kong Profits

Tax for the year ended 31 March 2016 (2015: RMBNil).

(ii) The Company and the subsidiaries of the Group incorporated in countries other than the PRC

(including Hong Kong) are not subject to any income tax pursuant to the rules and regulations of

their respective countries of incorporation.

(iii) The subsidiaries of the Group established in the PRC are subject to PRC Corporate Income Tax rate

of 25% (2015: 25%).

(iv) Non-deductible expenses for the year ended 31 March 2016 mainly represents the loss arising

from the changes in fair value on the derivative components of convertible bonds and certain

expenses without invoices.

(v) The Group wrote down previously recognised deferred tax assets of RMB2.1 million in respect

of impairment losses on property, plant and equipment (2015: RMBNil), as the management of

the Group expects that it is not probable that certain subsidiary of the Group will have enough

taxable profit to utilise the temporary differences in the future.

(vi) On 14 January 2016, the Group received a letter from local tax authority of Shenzhen which

stated that in accordance with certain local preferential tax policies, the income tax in respect

of the disposal of an investment property was agreed at an amount of RMB30,022,000. The

Company paid the amount to the local tax authority accordingly and reversed the difference

between the agreed amount and the originally accrued amount, which was calculated based on

the standard tax rate.



8 DIRECTORS’ EMOLUMENTSDirectors’ emoluments disclosed pursuant to section 383(1) of the Hong Kong Companies Ordinance

and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation are as

follows:

2016

Salaries,

allowances Retirement

Directors’ and benefits Discretionary scheme

fees in kind bonuses contributions Total


Executive directors

Mr. Li Lixin – – – – –

Mr. Cheng Jianhe – – – – –

Ms. Jin Yaxue – 420 218 12 650

Non-executive director

Mr. Lau Kin Hon – – – – –

Independent non-executive

directors

Mr. He Chengying 98 – – – 98

Mr. Cheung Kiu Cho Vincent 98 – – – 98

Mr. Shin Yick Fabian 117 – – – 117

313 420 218 12 963



8 DIRECTORS’ EMOLUMENTS (CONTINUED) 2015

Salaries,

allowances Retirement

Directors’ and benefits Discretionary scheme

fees in kind bonuses contributions Total


Executive directors

Mr. Li Lixin – – – – –

Mr. Cheng Jianhe – – – – –

Ms. Jin Yaxue

(appointed on 22 July 2014) – 420 512 12 944

Non-executive directors

Mr. Xu Jin

(resigned on 22 July 2014) – – – – –

Mr. Lau Kin Hon – – – – –

Independent non-executive

directors

Mr. He Chengying 95 – – – 95

Mr. Cheung Kiu Cho Vincent 95 – – – 95

Mr. Shin Yick Fabian 114 – – – 114

304 420 512 12 1,248



9 INDIVIDUALS WITH HIGHEST EMOLUMENTSOf the five individuals with the highest emoluments, one (2015: one) is a director whose emoluments

are disclosed in Note 8. The aggregate of the emoluments in respect of the remaining four (2015:

four) individuals are as follows:

2016 2015

RMB’000 RMB’000

Salaries, allowances and benefits in kind 2,199 2,096

Discretionary bonuses 564 521

Retirement scheme contributions 53 49

2,816 2,666

The emoluments of the employees who are not director and who are amongst the five highest paid

individuals of the Group are within the following bands:

2016 2015

(In Hong Kong dollar (“HK$”))

Nil – 1,000,000 2 2

1,000,001 – 1,500,000 2 2



10 OTHER COMPREHENSIVE INCOME

2016 2015

Before tax Net-of-tax Before tax Net-of-tax

amount Tax expense amount amount Tax expense amount

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Available-for-sale debt

securities:

Net movement in fair

value reserve (6,365) 1,591 (4,774) 11,289 (2,822) 8,467

Exchange differences on

translation into presentation

currency 3,019 – 3,019 (3,071) – (3,071)

Other comprehensive income (3,346) 1,591 (1,755) 8,218 (2,822) 5,396

11 EARNINGS PER SHARE(a) Basic earnings per share

The calculation of basic earnings per share for the year ended 31 March 2016 is based on

the profit attributable to ordinary equity shareholders of the Company of RMB24,998,000

(2015: profit attributable to ordinary equity shareholders of the Company of RMB82,212,000)

and the weighted average of 4,509,765,000 ordinary shares (2015: 4,176,964,000 ordinary

shares) in issue during the year, calculated as follows:

Weighted average number of ordinary shares:

2016 2015

’000 ’000

Issued ordinary shares at 1 April 4,176,964 4,176,964

Effect of issuance of ordinary shares upon

conversion of convertible bonds 332,801 –

Weighted average number of ordinary shares

at 31 March 4,509,765 4,176,964



11 EARNINGS PER SHARE (CONTINUED)(b) Diluted earnings per share

There are no dilutive potential ordinary shares during the year ended 31 March 2016. The

Group’s convertible bonds (see Note 25) were not included in the calculation of diluted

earnings per share because they are antidilutive during the year ended 31 March 2016.

The calculation of diluted earnings per share for the year ended 31 March 2015 was

based on the profit attributable to ordinary equity shareholders of the Company (diluted)

of RMB28,078,000 and the weighted average of 4,613,371,000 ordinary shares (diluted),

calculated as follows:

(i) Profit attributable to ordinary equity shareholders of the Company (diluted)

2015

RMB’000

Profit attributable to ordinary equity shareholders 82,212

After tax effect of effective interest and exchange differences

on the liability component of convertible bonds 9,109

After tax effect of changes in fair value recognised on the

derivative components of convertible bonds (57,024)

After tax effect of net gain on redemptions of convertible bonds (6,219)

Profit attributable to ordinary equity shareholders (diluted) 28,078

(ii) Weighted average number of ordinary shares (diluted)

2015

’000

Weighted average number of ordinary shares at 31 March 4,176,964

Effect of conversion of convertible bonds 436,407

Weighted average number of ordinary shares (diluted) at

31 March 4,613,371



12 PROPERTY, PLANT AND EQUIPMENT Leasehold Furniture,

land and Leasehold Plant and fixtures and Motor Construction

buildings improvements machinery equipment Moulds vehicles in progress Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost:

At 1 April 2014 849,782 87,883 56,858 82,156 220,245 7,461 5,819 1,310,204

Exchange adjustments – 1 – (9) – (3) – (11)

Additions – 5,639 9,717 2,037 – 1,114 14,441 32,948

Transfer in/(out) – 2,017 – – 12,696 – (14,713) –

Disposals – (1,397) (20,220) (12,995) (73,528) (2,678) – (110,818)

At 31 March 2015 849,782 94,143 46,355 71,189 159,413 5,894 5,547 1,232,323

Accumulated depreciation and

impairment losses:

At 1 April 2014 (88,788) (37,693) (28,684) (67,194) (186,603) (4,411) – (413,373)

Exchange adjustments – – – 8 – 2 – 10

Charge for the year (22,796) (9,724) (3,543) (4,540) (4,646) (949) – (46,198)

Written back on disposals – 801 19,036 12,119 73,343 2,403 – 107,702

At 31 March 2015 (111,584) (46,616) (13,191) (59,607) (117,906) (2,955) – (351,859)

Net book value:

At 31 March 2015 738,198 47,527 33,164 11,582 41,507 2,939 5,547 880,464



12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Leasehold Furniture,

land and Leasehold Plant and fixtures and Motor Construction

buildings improvements machinery equipment Moulds vehicles in progress Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost:

At 1 April 2015 849,782 94,143 46,355 71,189 159,413 5,894 5,547 1,232,323

Exchange adjustments – 10 – 34 – – – 44

Additions – 5,505 6,618 1,509 – 2,058 21,495 37,185

Transfer in/(out) – – – – 19,415 – (19,415) –

Disposals – – (1,032) (4,253) – (1,134) – (6,419)

At 31 March 2016 849,782 99,658 51,941 68,479 178,828 6,818 7,627 1,263,133

Accumulated depreciation and

impairment losses:

At 1 April 2015 (111,584) (46,616) (13,191) (59,607) (117,906) (2,955) – (351,859)

Exchange adjustments – (2) – (28) – – – (30)

Charge for the year (22,714) (11,756) (4,478) (3,684) (6,777) (1,235) – (50,644)

Written back on disposals – – 454 3,778 – 656 – 4,888

At 31 March 2016 (134,298) (58,374) (17,215) (59,541) (124,683) (3,534) – (397,645)

Net book value:

At 31 March 2016 715,484 41,284 34,726 8,938 54,145 3,284 7,627 865,488

(i) At 31 March 2016, property certificates of certain properties with an aggregate net book

value of RMB16,739,000 (31 March 2015: RMB17,206,000) are yet to be obtained.

(ii) Certain of the Group’s leasehold land and buildings were pledged against bank loans drawn

by the Group (see Note 24(c)).



13 INVESTMENT PROPERTIES

2016 2015

RMB’000 RMB’000

Valuation:

At 1 April 434,190 2,065,480

Additions – 108,564

Fair value adjustments:

– (losses)/gains included in the consolidated

statement of profit or loss (8,800) 17,646

Disposal – (1,757,500)

At 31 March 425,390 434,190

Notes:

(a) Fair value measurement of investment properties

(i) Fair value hierarchy

The following table presents the fair value of the Group’s investment properties measured at

the end of the reporting period on a recurring basis, categorised into the three-level fair value

hierarchy as defined in HKFRS 13, Fair value measurement. The level into which a fair value

measurement is classified is determined with reference to the observability and significance of the

inputs used in the valuation technique as follows:

• Level 1 valuations: Fair valuemeasured using only Level 1 inputs, i.e. unadjusted quoted

prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 valuations: Fair valuemeasuredusing Level 2 inputs, i.e. observable inputswhich

fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs

are inputs for which market data are not available.

• Level3valuations:Fairvaluemeasuredusingsignificantunobservableinputs.



13 INVESTMENT PROPERTIES (CONTINUED)Notes: (continued)

(a) Fair value measurement of investment properties (continued)

(i) Fair value hierarchy (continued)

Fair value measurements

categorised into Level 2

at 31 March

Recurring fair value measurements 2016 2015

RMB’000 RMB’000

Investment properties 425,390 434,190

During the year ended 31 March 2016, there were no transfers between Level 1 and Level 2, or

transfers into or out of Level 3 (2015: Nil). The Group’s policy is to recognise transfers between

levels of fair value hierarchy as at the end of the reporting period in which they occur.

All of the Group’s investment properties were revalued as at 31 March 2016. The valuations were

carried out by a qualified surveyor, DTZ Debenham Tie Leung International Property Advisers

(Shanghai) Co., Ltd., who have among their staff Fellows of the Hong Kong Institute of Surveyors

with recent experience in the location and category of properties being valued. The Group’s Chief

Financial Officer has discussed with the surveyors on the valuation assumptions and valuation

results when the valuation is performed at each annual reporting date.

(ii) Valuation techniques and inputs used in Level 2 fair value measurements

The fair value of investment properties located in the PRC is determined using income

capitalisation approach.

(b) Certain of the Group’s investment properties were pledged against bank loans drawn by the Group (see

Note 24(c)).



14 INVESTMENTS IN SUBSIDIARIESThe following list contains only the particulars of subsidiaries which principally affected the results,

assets or liabilities of the Group.

Proportion of ownership interest

Particulars of The

Place of registered/issued Group’s Held Held

establishment/ and paid-up effective by the by Principal

Name of company incorporation capital interest Company subsidiaries activities

Da Mei (Ningbo) Electrical The PRC Registered and 100% – 100% Manufacture and

Appliance Limited* paid-up capital of sale of household

達美（寧波）電器有限公司 United States electrical

dollar (“USD”) appliances and

49,217,379 plastic products

Jinda Plastic* The PRC Registered and 100% – 100% Property holding

金達塑膠五金制品 paid-up capital of

（深圳）有限公司 HK$180,000,000

Ningbo New JoySun Corp* The PRC Registered and 100% – 100% Wholesale of household

(“New JoySun”) paid-up capital of products and wine and

寧波新江廈股份有限公司 RMB60,000,000 beverages, operation of

department stores,

and provision of

financing to group

companies

Ningbo New JoySun The PRC Registered and 100% – 100% Wholesale and

Electrical Appliance paid-up capital of installation of

Departmental Store RMB10,000,000 household electrical

Wholesale Limited* appliances

寧波新江廈家電百貨批發有限公司

Ningbo New JoySun The PRC Registered and 82% – 82% Operation of

Supermarket Chain paid-up capital of supermarkets

Limited* RMB30,000,000

(“New JoySun Supermarket”)

寧波新江廈連鎖超市有限公司

Ningbo Lisi Supermarket The PRC Registered and 82% – 82% Operation of

Limited* paid-up capital of supermarket

寧波利時超市有限公司 RMB1,000,000



14 INVESTMENTS IN SUBSIDIARIES (CONTINUED) Proportion of ownership interest

Particulars of The

Place of registered/issued Group’s Held Held

establishment/ and paid-up effective by the by Principal

Name of company incorporation capital interest Company subsidiaries activities

Ningbo New JoySun The PRC Registered and 82% – 82% Provision of

Logistic Limited* paid-up capital of transportation and

寧波新江廈物流有限公司 RMB5,000,000 logistic services to

group companies

Quzhou Lisi Supermarket The PRC Registered and 82% – 82% Operation of


衢州利時超市有限公司 RMB1,000,000

Tonglu Lisi Supermarket The PRC Registered and 82% – 82% Operation of


桐廬利時超市有限公司 RMB1,000,000

Xiangshan Lisi Department The PRC Registered and 100% – 100% Operation of

Store Limited* paid-up capital of department store

象山利時百貨有限公司 RMB20,000,000

Ningbo Lisi Household The PRC Registered and 100% – 100% Trading of plastic and

Products Company paid-up capital of metallic household

Limited* HK$50,000,000 products

寧波利時日用品有限公司

* The English translation of the names are for reference only and the official names of these entities are in

Chinese.

The following table lists out the combined financial information of Ningbo New JoySun Supermarket

Chain Limited and its subsidiaries, the only sub-group within the Group which has material non-

controlling interests (“NCI”). The summarised financial information presented below represents the

amounts before any inter-company elimination.



14 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

2016 2015

RMB’000 RMB’000

NCI percentage 18% 18%

Non-current assets 561,054 582,897

Current assets 573,676 524,072

Current liabilities (645,307) (615,654)

Non-current liabilities (104,870) (106,840)

Net assets 384,553 384,475

Carrying amount of NCI 69,220 69,206

Revenue 443,684 456,534

Profit/(loss) for the year 78 (10,569)

Profit/(loss) allocated to NCI 14 (1,902)

15 GOODWILL

2016 2015

RMB’000 RMB’000

At the beginning and the end of reporting period, at cost 43,313 43,313

On 31 March 2011, the Group acquired the 100% equity interests of Wealthy Glory Holdings Limited

for a consideration of RMB90,000,000. The excess of the cost of the purchase over the net fair value

of the identifiable net assets of Wealthy Glory Holdings Limited and its subsidiaries (the “Wealthy

Glory Group”) of RMB43,313,000 was recorded as goodwill and allocated to the Wealthy Glory

Group’s manufacturing and trading of household products business (the “Relevant CGU”).

The recoverable amount of the Relevant CGU is determined based on value-in-use calculations.

These calculations use cash flow projections based on financial budgets prepared by the directors

of the Company covering a five-year period. These cash flow projections adopted annual growth

rates ranging from 5% to 10% (2015: from 5% to 10%), which are based on the Group’s historical

experience with this business and adjusted for other factors that are specific to the Relevant CGU.

Cash flows beyond the five-year period are extrapolated using a 2% long-term growth rate (2015:

2%), which is based on the relevant industry growth forecasts and does not exceed the average

long-term growth rate of the relevant industry. The cash flows are discounted using a discount rate

of 22% (2015: 19%). The discount rates used are pre-tax and reflect specific risks relating to the

Relevant CGU.



16 INTANGIBLE ASSETS Customer and supplier

relationships

RMB’000

Cost:

At 1 April 2014, 31 March 2015 and 31 March 2016 29,456

Accumulated amortisation:

At 1 April 2014 (11,707)

Charge for the year (5,374)

At 31 March 2015 (17,081)

Charge for the year (5,374)

At 31 March 2016 (22,455)

Net book value:

At 31 March 2016 7,001

At 31 March 2015 12,375

The amortisation charge for the year is included in “Administrative expenses” in the consolidated

statement of profit or loss.

17 INTERESTS IN AN ASSOCIATEThe following list contains the particulars of the Group’s associate, which is an unlisted entity whose

quoted market price is not available:

Proportion of ownership interest

The

Place of Particulars of Group’s Held Held

Name of establishment registered and effective by the by a Principal

associate and operations paid-up capital interest Company subsidiary activities

Veritas-Msi (China) The PRC Registered and 24.76% – 24.76% Development and

Company Limited paid-up capital of provision of

寧波威瑞泰默賽多相流 RMB32,832,887 separation technology

儀器設備有限公司 on natural resources

The above associate is accounted for using the equity method in the consolidated financial

statements.



17 INTERESTS IN AN ASSOCIATE (CONTINUED)Summarised financial information of the associate, adjusted for any differences in accounting

policies, and reconciled to the carrying amounts in the consolidated financial statements, are

disclosed below:

2016 2015

RMB’000 RMB’000

Gross amounts of the associate:

Non-current assets 149,129 164,863

Current assets 157,248 211,947

Current liabilities (232,526) (246,033)

Non-current liabilities (19,445) (19,991)

Net assets 54,406 110,786

Revenue 99,336 49,699

Loss for the year (56,380) (35,540)

Group’s effective interest 24.76% 24.76%

Group’s share of losses of the associate (13,960) (8,800)

Reconciliation to the Group’s interests in the associate

Gross amounts of net assets of the associate 54,406 110,786

Group’s effective interest 24.76% 24.76%

Group’s share of net assets of the associate 13,471 27,431

Goodwill 12,713 12,713

Carrying amount in the consolidated financial statements 26,184 40,144



18 AVAILABLE-FOR-SALE INVESTMENTS

2016 2015

RMB’000 RMB’000

Non-current assets

Unlisted equity securities (Note (i)) 72,194 82,881

Current assets

Unlisted debt securities (Note (ii))

– with original maturity more than three months 524,924 531,289

– with original maturity within three months 120,000 –

644,924 531,289

Note (i): The balance represents the Group’s investments in unquoted equity securities of certain PRC companies

and are measured in accordance with the accounting policy set out in Note 2(g). During the year ended

31 March 2016, the Group disposed its entire equity interests in a PRC company in exchange of certain

equity interests of another PRC company. The difference between the carrying amount of the equity

interests disposed and the fair value of the equity interests acquired with an amount of RMB10,687,000

was recognised in the consolidated statement of profit or loss.

Note (ii): The unlisted debt securities represent wealth management products issued by financial institutions with

variable returns, and are measured in accordance with the accounting policies set out in Note 2(g).

19 INVENTORIES(a) Inventories in the consolidated statement of financial position comprise:

2016 2015

RMB’000 RMB’000

Raw materials 32,438 39,533

Work in progress 12,823 12,901

Finished goods 12,240 5,985

Merchandises 90,586 93,639

148,087 152,058



19 INVENTORIES (CONTINUED)(b) An analysis of the amount of inventories recognised as an expense and included in the

consolidated statement of profit or loss is as follows:

2016 2015 RMB’000 RMB’000

Carrying amount of inventories sold 807,927 869,525

All of the inventories are expected to be recovered within one year.

20 TRADE AND OTHER RECEIVABLES

2016 2015 RMB’000 RMB’000

Trade receivables from (Notes 20(i) and 20(iii)):– Third parties 28,609 33,471– Companies under the control of the controlling equity shareholder of the Company (the “Controlling Shareholder”) (Note (a)) 154,981 150,308– A non-controlling equity holder of a subsidiary of the Group 11,245 17,423Bills receivable 4,076 3,420

198,911 204,622Less: allowance for doubtful debts (Note 20(ii)) – –

198,911 204,622

Amounts due from companies under the control of the Controlling Shareholder (Note (b)) 1,005 2,166

Amount due from an associate (Note (c)) 5,556 5,000

Prepayments, deposits and other receivables:– Prepayments and deposits for operating leases expenses 4,690 4,944– Prepayments for purchase of inventories 20,362 8,798– Advances to third parties 3,104 28,178– Receivable from the disposal of investment property 469,040 1,247,400– Others 16,003 13,289

513,199 1,302,609Less: allowance for doubtful debts (Note 20(ii)) – –

513,199 1,302,609

718,671 1,514,397



20 TRADE AND OTHER RECEIVABLES (CONTINUED)Note (a): The balance mainly related to transactions under an export agency agreement entered into between

the Group and a company under the control of the Controlling Shareholder which has been approved

by the independent equity shareholders of the Company on 26 February 2013. The agreement has

been renewed on 16 December 2015 and approved by the independent equity shareholders of the

Company on 15 February 2016.

Note (b): The amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

Note (c): The amount is unsecured, bears interest at 8% per annum (31 March 2015: 8% per annum) and is

repayable in November 2016 (31 March 2015: repayable in November 2015).

All of the trade and other receivables are expected to be recovered or recognised as expenses within

one year.

(i) Ageing analysis

Included in trade and other receivables are trade and bills receivables (net of allowance for

doubtful debts) with the following ageing analysis (based on the invoice date) as of the end

of the reporting period:

2016 2015 RMB’000 RMB’000

Within 1 month 43,793 67,604

More than 1 month but less than 3 months 88,685 93,456

Over 3 months 66,433 43,562

198,911 204,622

Further details on the Group’s credit policy are set out in Note 31(a).

(ii) Impairment of trade and other receivables

Impairment losses in respect of trade and other receivables are recorded using an allowance

account unless the Group is satisfied that recovery of the amount is remote, in which case the

impairment loss is written off against trade and other receivables directly (see Note 2(n)(i)).

The movements in the allowance for doubtful debts during the year are as follows:

2016 2015 RMB’000 RMB’000

At 1 April – 317

Exchange adjustments – –

Impairment losses recognised 50,000 –

Uncollectible amounts written off (50,000) (317)

At 31 March – –



20 TRADE AND OTHER RECEIVABLES (CONTINUED)(ii) Impairment of trade and other receivables (continued)

At 31 March 2016, the Group’s trade and other receivables of RMB519,040,000 (31 March

2015: RMBNil) were individually determined to be impaired. The individually impaired

receivables related to a debtor with whom a new agreement was entered into by the

Group pursuant to which the parties agreed the receivables shall be adjusted downward by

RMB50,000,000. Consequently, specific allowance for doubtful debts of RMB50,000,000 was

recognised and was subsequently written off (31 March 2015: RMBNil).

(iii) Trade and bills receivables that are not impaired

The ageing analysis of trade and bills receivables that are neither individually nor collectively

considered to be impaired is as follows:

2016 2015 RMB’000 RMB’000

Neither past due nor impaired 123,708 141,564

Less than 1 month past due 59,767 48,084

More than 1 month but less than 3 months past due 9,108 12,237

More than 3 months past due 6,328 2,737

75,203 63,058

198,911 204,622

Receivables that were neither past due nor impaired relate to bills receivable from the issuing

banks and customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of customers that have

a good track record with the Group. Based on past experience, management believes that

no impairment allowance is necessary in respect of these balances as there has not been a

significant change in credit quality and the balances are still considered fully recoverable.

21 RESTRICTED BANK DEPOSITS

2016 2015 RMB’000 RMB’000

Pledged deposits for issuance of bank bills 139,416 132,974

Pledged deposits for issuance of standby letter of credit 180,000 –

319,416 132,974



22 CASH AND CASH EQUIVALENTS

2016 2015 RMB’000 RMB’000

Cash at bank and on hand 258,198 135,395

The Group’s operations in the PRC conduct their businesses in RMB. RMB is not a freely convertible

currency and the remittance of funds out of the PRC is subject to the exchange restrictions imposed

by the PRC government.

23 TRADE AND OTHER PAYABLES

2016 2015 RMB’000 RMB’000

Trade payables to:

– Third parties 166,955 186,394

– Companies under the control of the Controlling Shareholder 52,370 53,777

219,325 240,171

Bills payable 101,522 89,324

320,847 329,495

Amounts due to companies under the control of

the Controlling Shareholder (Note (i)) 27,212 26,087

Accrued charges and other payables:

– Accrued operating lease expenses 23,977 18,208

– Payables for staff related costs 34,965 33,478

– Accruals for costs incurred on investment property – 8,572

– Deposits from suppliers 6,226 5,354

– Payables for interest expenses 4,390 9,865

– Payables for miscellaneous taxes 4,912 6,795

– Others 15,099 14,749

89,569 97,021

Financial liabilities measured at amortised cost 437,628 452,603

Advances received from customers 68,717 75,055

506,345 527,658

Note:

(i) The amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

All of the trade and other payables are expected to be settled or recognised as revenue within one

year or are repayable on demand.



23 TRADE AND OTHER PAYABLES (CONTINUED)Included in trade and other payables are trade and bills payables with the following ageing analysis

(based on the invoice date) as of the end of the reporting period:

2016 2015 RMB’000 RMB’000

Within 1 month 116,916 104,002

Over 1 month but within 3 months 76,222 136,653

Over 3 months but within 6 months 106,896 82,711

Over 6 months 20,813 6,129

320,847 329,495

24 BANK AND OTHER LOANS(a) The Group’s short-term bank and other loans are analysed as follows:

2016 2015 RMB’000 RMB’000

Bank loans:

– Pledged by bank bills 138,250 118,250

– Pledged by bank deposits 192,205 –

– Secured by the Group’s leasehold land and buildings

and investment properties (Note 24(c)) 267,300 142,300

– Secured by the Group’s leasehold land and

buildings and investment properties and

guaranteed by companies under the control of

the Controlling Shareholder (Note 24(c)) 100,000 222,400

– Secured by the Group’s leasehold land and

buildings and investment properties and

guaranteed by companies under the control of

the Controlling Shareholder and secured by their

property, plant and equipment (Note 24(c)) 39,000 –

– Secured by property, plant and equipment of a company

under the control of the Controlling Shareholder – 17,600

– Guaranteed by companies under the

control of the Controlling Shareholder 30,000 50,000

766,755 550,550



24 BANK AND OTHER LOANS (CONTINUED)(a) The Group’s short-term bank and other loans are analysed as follows: (continued)

2016 2015 RMB’000 RMB’000

Loans from third parties:

– Unguaranteed and unsecured 5,291 121,078

Loans from a company under the control of

the Controlling Shareholder:

– Unguaranteed and unsecured 416 2,063

772,462 673,691

Add:

– Current portion of long-term bank loans

(Note 24(b)) 17,765 24,000

790,227 697,691

(b) The Group’s long-term bank loans are analysed as follows:

2016 2015 RMB’000 RMB’000

Bank loans:

– Secured by the Group’s leasehold land and buildings

and investment properties (Note 24(c)) 289,380 340,380

Less:

– Current portion of long-term bank loans (Note 24(a)) (17,765) (24,000)

271,615 316,380

The Group’s long-term bank loans are repayable as follows:

2016 2015 RMB’000 RMB’000

Within 1 year or on demand 17,765 24,000

After 1 year but within 2 years 23,065 26,540

After 2 years but within 5 years 205,950 167,240

After 5 years 42,600 122,600

289,380 340,380



24 BANK AND OTHER LOANS (CONTINUED)(b) The Group’s long-term bank loans are analysed as follows: (continued)

All of the non-current interest-bearing borrowings are carried at amortised cost and are not

expected to be settled within one year.

At 31 March 2016, the Group’s banking facilities amounted to RMB562,752,280 (31 March

2015: RMB428,257,000) were utilised to the extent of RMB386,204,700 (31 March 2015:

RMB290,000,000).

(c) Certain of the Group’s bank loans are secured by the Group’s leasehold land and

buildings and investment properties. The aggregate carrying values of the secured

leasehold land and buildings and investment properties are analysed as follows:

2016 2015 RMB’000 RMB’000

Pledged for short-term bank loans:

Leasehold land and buildings (Note 12) 185,606 242,285

Investment properties (Note 13) 357,390 365,190

542,996 607,475

Pledged for long-term bank loans:

Leasehold land and buildings (Note 12) 465,029 488,946

Investment properties (Note 13) 54,000 55,000

519,029 543,946

1,062,025 1,151,421



25 CONVERTIBLE BONDS Liability Derivative

component components Total

RMB’000 RMB’000 RMB’000

At 1 April 2014 97,295 111,724 209,019

Accrued finance charges for the year

(Note 6(a)) 9,427 – 9,427

Fair value changes on the derivative

components (Note 6(a)) – (57,024) (57,024)

Reclassification to interest payable (3,378) – (3,378)

Redemption during the year (Note (ii)) (14,033) (8,810) (22,843)

Exchange adjustments (123) (195) (318)

At 31 March 2015 and 1 April 2015 89,188 45,695 134,883

Accrued finance charges for the year

(Note 6(a)) 1,649 – 1,649

Fair value changes on the derivative

components (Note 6(a)) – 90,547 90,547

Interest paid (1,806) – (1,806)

Exchange adjustments 87 34 121

Conversion into ordinary shares of

the Company (Note (iii)) (89,118) (136,276) (225,394)

At 31 March 2016 – – –



25 CONVERTIBLE BONDS (CONTINUED)Notes:

(i) On 30 August 2013, the Company issued unsecured convertible bonds with an aggregate face value of

HK$382,800,000 (equivalent to approximately RMB302,067,000), interest bearing at 3% per annum and

maturing on 30 August 2016 to Shi Hui Holdings Limited (“Shi Hui”), a company under the control of the

Controlling Shareholder, as part of the consideration for the Group’s acquisition of subsidiaries from Shi

Hui (the “Shi Hui Bonds”).

Upon issuance, the holder of the Shi Hui Bonds could, at any time up till 30 August 2016, convert the

Shi Hui Bonds into the Company’s shares at HK$0.3 per share (i.e. the conversion option). The Company

has the right to redeem the Shi Hui Bonds in whole or in part at any time before the maturity date at its

face value (i.e. the call option). Both the conversion and call options are classified as derivative financial

instruments and have been included in the balance of convertible bonds in the consolidated statement of

financial position.

(ii) On 19 September 2014, the Group has redeemed a principal amount of HK$20,325,000 (equivalent to

approximately RMB16,114,000) of the Shi Hui Bonds in cash.

The difference between the redemption and carrying amount of the redeemed bonds of RMB6,219,000

has been recognised as gain in the consolidated statement of profit or loss during the year ended 31

March 2015.

(iii) On 5 June 2015, the Shi Hui Bonds issued by the Company with an aggregate principal amount of

HK$121,400,400 were converted into 404,668,141 ordinary shares at the conversion price of HK$0.3

per share by Shi Hui. Consequently, the Company issued new ordinary shares to Shi Hui and its two

nominees, Chance Talent Management Limited and HNW Investment Fund Series SPC. Upon completion

of the conversion on 5 June 2015, the number of ordinary shares of the Company in issue increased from

4,176,963,794 to 4,581,631,935.

26 INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION(a) Movements in current taxation in the consolidated statement of financial position are

as follows:

2016 2015 RMB’000 RMB’000

Balance of income tax payable at 1 April 349,393 5,322

Provision for income tax on the estimated taxable

profits for the year (Note 7(a)) 12,018 355,216

Reclassification of deferred tax relating to

revaluation surplus of a disposed investment property – 2,865

Over-provision in respect of prior years (Note 7(a)) (314,745) (179)

Income tax paid (42,352) (13,831)

Balance of income tax payable at 31 March 4,314 349,393



26 INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)(b) Deferred tax assets and liabilities recognised:

The components of deferred tax assets/(liabilities) recognised in the consolidated statement of

financial position and the movements during the year are as follows:

Assets Liabilities

Fair value

adjustments

on property,

plant and

equipment,

investment

properties

and Tax

intangible allowance Fair value

Impairment assets in excess of adjustments

Accrued losses on and related depreciation on

operating property, depreciation on property, available-

Unused lease plant and and plant and for-sale debt

Deferred tax arising from: tax losses expenses equipment Total amortisation equipment securities Total Net

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 April 2014 48,594 3,358 5,788 57,740 (601,109) (11,773) – (612,882) (555,142)

(Charged)/credited to the

consolidated statement

of profit or loss (Note 7(a)) (19,826) (86) (2,708) (22,620) 358,833 (1,378) – 357,455 334,835

Charged to reserves (Note 10) – – – – – – (2,822) (2,822) (2,822)

Reversal of deferred tax relating

to revaluation surplus of

properties upon disposal of

investment properties

(Note 26(a)) – – – – 2,865 – – 2,865 2,865

At 31 March 2015 28,768 3,272 3,080 35,120 (239,411) (13,151) (2,822) (255,384) (220,264)

(Charged)/credited to the

consolidated statement

of profit or loss (Note 7(a)) – (82) (2,146) (2,228) 5,191 (870) – 4,321 2,093

Credited to reserves (Note 10) – – – – – – 1,591 1,591 1,591

At 31 March 2016 28,768 3,190 934 32,892 (234,220) (14,021) (1,231) (249,472) (216,580)



26 INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)(c) Deferred tax assets not recognised

In accordance with the accounting policy set out in Note 2(u), the Group has not recognised

deferred tax assets in respect of unused tax losses arising from certain subsidiaries of the

Group of RMB98,165,000 (31 March 2015: RMB94,755,000) as it is not probable that

future taxable profits against which the losses can be utilised will be available in the relevant

tax jurisdiction and entity. Except for the amount of RMB70,573,000 (31 March 2015:

RMB67,552,000) which will not expire under the relevant tax legislation, the remaining

unused tax losses at 31 March 2016 will expire on or before 31 December 2021.

(d) Deferred tax liabilities not recognised

At 31 March 2016, temporary differences relating to the undistributed profits of certain

subsidiaries of the Group established in the PRC amounted to RMB1,486,982,000 (31 March

2015: RMB1,350,307,000). Deferred tax liabilities of RMB74,349,000 (31 March 2015:

RMB67,515,000) have not been recognised in respect of the tax that would be payable on

the distribution of these retained profits as the Company controls the dividend policy of these

subsidiaries and it has been determined that it is probable that profits will not be distributed

in the foreseeable future.



27 CAPITAL, RESERVES AND DIVIDENDS(a) Movements in components of equity

The reconciliation between the opening and closing balances of each component of the

Group’s consolidated equity is set out in the consolidated statement of changes in equity.

Details of the changes in the Company’s individual components of equity between the

beginning and the end of the year are set out below:

The Company

Capital Retain profits/

Share Share redemption Contributed Exchange (accumulated

capital premium reserve surplus reserve losses) Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

(Note (Note (Note (Note (Note

27(c)) 27(d)(i)) 27(d)(i)) 27(d)(iii)) 27(d)(iv))

At 1 April 2014 36,138 541,228 1,341 80,583 (20,648) (156,388) 482,254

Changes in equity for the year

ended 31 March 2015:

Profit and total comprehensive income – – – – – 50,735 50,735

At 31 March 2015 36,138 541,228 1,341 80,583 (20,648) (105,653) 532,989

At 1 April 2015 36,138 541,228 1,341 80,583 (20,648) (105,653) 532,989

Changes in equity for the year

ended 31 March 2016:

Profit and total comprehensive income – – – – – 273,516 273,516

Issuance of ordinary shares upon

conversion of convertible bonds 3,236 222,158 – – – – 225,394

Special distribution approved and

paid during the year (Note 27(b)(ii)) – (183,197) – – – – (183,197)

Transfer between share premium

accounts and contributed surplus

accounts of the Company – (580,189) – 580,189 – – –

3,236 (541,228) – 580,189 – 273,516 315,713

At 31 March 2016 39,374 – 1,341 660,772 (20,648) 167,863 848,702



27 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)(b) Dividends/distribution

(i) The directors of the Company did not recommend the payment of a final dividend for

the year ended 31 March 2016 (2015: RMBNil).

(ii) Special distribution payable to equity shareholders of the Company approved and paid

during the year:

2016 2015

RMB’000 RMB’000

Special distribution approved and paid during

the year, of HK$0.05 per ordinary share 183,197 –

(c) Share capital

(i) Issued share capital

2016 2015

No. of No. of

shares shares

’000 HK$’000 ’000 HK$’000

Authorised:

Ordinary shares at

HK$0.01 each 10,000,000 100,000 10,000,000 100,000

2016 2015

No. of No. of

shares shares

’000 RMB’000 ’000 RMB’000

Ordinary shares, issued

and fully paid:

At 1 April 4,176,964 36,138 4,176,964 36,138

Issuance of ordinary shares

upon conversion of

convertible bonds 404,668 3,236 – –

At 31 March 4,581,632 39,374 4,176,964 36,138

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

On 5 June 2015, the Shi Hui Bonds issued by the Company with an aggregate principal amount of HK$121,400,400 were converted into 404,668,141 ordinary shares at the conversion price of HK$0.3 per share by Shi Hui and the number of ordinary shares of the Company in issue increased from 4,176,963,794 to 4,581,631,935 (see Note 25).



27 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)(d) Nature and purpose of reserves

(i) Share premium and capital redemption reserve

The application of the share premium and capital redemption reserve accounts is

governed by Section 40 and Section 42A of the Bermuda Companies Act 1981,

respectively.

(ii) Statutory reserves

In accordance with the articles of association of the subsidiaries of the Group

established in the PRC, these subsidiaries were required to set up certain statutory

reserves, which were non-distributable. The transfer of these reserves are at discretion

of the directors of the respective subsidiaries. The statutory reserves can only be utilised

for predetermined means upon approval by the relevant authority.

(iii) Contributed surplus

The contributed surplus of the Group represented the difference between the nominal

value of the aggregate share capital of the subsidiaries at the date on which they

were acquired by the Group and the nominal value of the Company’s shares issued as

consideration for the acquisition took place during a reorganisation of the Group in

1995.

Pursuant to a resolution passed by the Directors of the Company on 16 December

2015, the Company proposed to transfer full amount from share premium accounts to

contributed surplus accounts of the Company.

Upon completion of the above transfer, which was approved by the equity shareholders

of the Company at the Company’s Special General Meeting on 15 February 2016,

an amount of HK$715.3 million (equivalent to approximately RMB580.2 million) was

transferred from share premium accounts to contributed surplus accounts of the

Company.

(iv) Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the

translation of the financial statements of operations which have a functional currency

other than RMB into RMB. The reserve is dealt with in accordance with the accounting

policy set out in Note 2(x).

(v) Property revaluation reserve

The property revaluation reserve has been set up to deal with the reclassification of

properties from leasehold land and buildings held for own use to investment properties.

The revaluation surplus was transferred from the revaluation reserve to retained profits

on the date of disposal of the related investment property.

(vi) Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of

available-for-sale debt securities held at the end of the reporting period and is dealt

with in accordance with the accounting policies set out in Note 2(g).



27 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)(d) Nature and purpose of reserves (continued)

(vii) Other reserve

The other reserve has been set up to recognise for the present value of exercise price of

the equity transfer agreement the Company entered into on 3 August 2015 to acquire

18% equity interests in New JoySun Supermarket from the current non-controlling

equity holder of New JoySun Supermarket at a consideration of RMB38.9 million.

(e) Distributable reserves

At 31 March 2016, the aggregate amount of reserves (including the Company’s retained

profits, if any, and share premium, subject to equity shareholders’ approval, and contributed

surplus, subject to satisfaction of the related laws and regulations) available for distribution

to the equity shareholders of the Company was RMB828,635,000 (31 March 2015:

RMB621,811,000). The directors of the Company did not recommend the payment of a final

dividend for the year ended 31 March 2016 (2015: RMBNil).

(f) Capital management

The Group’s primary objectives when managing capital are to safeguard the Group’s ability to

continue as a going concern, so that it can continue to provide returns for equity shareholders

and benefits for other stakeholders, by pricing products and services commensurately with the

level of risk and by securing access to finance at a reasonable cost.

The Group actively and regularly reviews and manages its capital structure to maintain a

balance between the higher equity shareholder returns that might be possible with higher

levels of borrowings and the advantages and security afforded by a sound capital position,

and makes adjustments to the capital structure in light of changes in economic conditions.

The Group monitors its capital structure on the basis of an adjusted net debt-to-capital ratio.

For this purpose, adjusted net debt is defined as total debt (which includes bank and other

loans, convertible bonds, and trade and other payables) plus unaccrued proposed dividends/

distributions, less cash and cash equivalents. Adjusted capital comprises all components of

equity less unaccrued proposed dividends/distributions.

During 2016, the Group’s strategy was to maintain the adjusted net debt-to-capital ratio to a

similar level in 2015. In order to improve the Group’s capital structure, the Group may adjust

the amount of dividends/distributions paid to equity shareholders, issue new shares, raise new

debt financing or sell assets to reduce debt.



27 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)(f) Capital management (continued)

The Group’s adjusted net debt-to-capital ratio at 31 March 2016 and 2015 was as follows:

2016 2015

RMB’000 RMB’000

Current liabilities:

Trade and other payables 506,345 527,658

Bank and other loans 790,227 697,691

1,296,572 1,225,349

Non-current liabilities:

Bank and other loans 271,615 316,380

Convertible bonds – 134,883

271,615 451,263

Total debt 1,568,187 1,676,612

Add: proposed distributions – 183,197

Less: cash and cash equivalents (258,198) (135,395)

Adjusted net debt 1,309,989 1,724,414

Total equity 1,739,785 1,713,211

Less: proposed distributions – (183,197)

Total equity and adjusted capital 1,739,785 1,530,014

Adjusted net debt-to-capital ratio 75% 113%



28 MATERIAL RELATED PARTY TRANSACTIONSIn addition to the balances disclosed elsewhere in these financial statements, the Group entered into

the following material related party transactions:

(a) Transactions with companies under the control of the Controlling Shareholder

2016 2015


Sales of goods 2,135 2,401

Purchases of goods 73,803 111,854

Import and export handling charges 4,178 4,732

Rental income from operating leases 4,200 3,840

Operating lease expenses 14,076 14,076

Interest income (i) – 7,283

Interest expenses (ii) 759 3,193

Net increase in non-interest bearing advances

received from related parties (iii) 4,351 5,828

Net increase in non-interest bearing advances

granted to related parties (iii) 98,152 68,629

Net decrease in loans received from

related parties (iv) 1,647 1,774

Guarantees received from and property,

plant and equipment pledged by related

companies for the Group’s bank loans

at the end of the reporting period 169,000 290,000

Further details on the issuance to, redemptions and conversion of convertible bonds from

related parties are set out in Note 25.

(b) Transactions with a non-controlling equity holder of a subsidiary of the Group

2016 2015

RMB’000 RMB’000

Sales of goods 31,139 26,471

(c) Transactions with an associate of the Group

2016 2015


Interest income (i) 556 –

Increase in interest bearing advances

granted to related parties (v) – 5,000



28 MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)(d) Key management personnel remuneration

Remuneration for key management personnel, including amounts paid to the Company’s

directors as disclosed in Note 8 and the highest paid employees as disclosed in Note 9, is as

follows:

2016 2015

RMB’000 RMB’000

Short-term employee benefits 4,928 5,037

Contributions to defined contribution retirement plans 124 110

5,052 5,147

Total remuneration is included in “staff costs” (see Note 6(b)).

Notes:

(i) Interest income represented interest charges on the advances granted to related parties.

(ii) Interest expenses represented interest charges on loans and convertible bonds received from

related parties.

(iii) The advances are unsecured and have no fixed terms of repayment.

(iv) The loan is unsecured, bear interest ranging at 2.56% (2015: 2.38% to 2.39%) per annum and is

repayable in March 2017 (2015: between April 2015 to June 2015).

(v) The advance was unsecured, bore interest at 8% per annum and was originally repayable

in November 2015. The advance was renewed during the year ended 31 March 2016 and is

repayable in November 2016.

(e) Applicability of the Listing Rules relating to connected transactions

The related party transactions included in Notes 28(a) and 28(b) above constitute connected

transactions or continuing connected transactions as defined in Chapter 14A of the Listing

Rules. These transactions are disclosed in the Report of the Board of Directors as required

by Chapter 14A of the Listing Rules, except for rental income from operating leases, interest

expenses, net increase in non-interest bearing advances received from related parties and

net decrease in loans received from related parties which are exempted from the disclosure

requirement.



29 COMMITMENTS(a) Capital commitments

At 31 March 2016, the outstanding capital commitments of the Group not provided for in the

consolidated financial statements were as follows:

2016 2015

RMB’000 RMB’000

Commitments in respect of leasehold land and buildings,

and plant and machinery

– Contracted for 1,462 3,079

(b) Operating lease commitments

(i) At 31 March 2016, the total future minimum lease payments under non-cancellable

operating leases are payable as follows:

2016 2015

RMB’000 RMB’000

Within 1 year 35,091 29,539


After 5 years 24,523 30,350

125,384 115,537

The Group leases a number of properties for the use by its supermarkets and

manufacturing operations under operating leases. The leases typically run for an

initial period of 1 to 20 years, with an option to renew the lease when all terms are

renegotiated. None of the leases includes contingent rentals.

(ii) At 31 March 2016, the total future minimum lease payments under non-cancellable

operating leases are receivable as follows:

2016 2015

RMB’000 RMB’000

Within 1 year 30,766 36,760


After 5 years 1,052 5,705

70,943 112,814

The Group leases out part or whole of its department stores and supermarkets and

certain of its leasehold land and buildings under operating leases. The leases typically

run for an initial period of 1 to 10 years, with an option to renew the lease when

all terms are renegotiated. One of the leases includes contingent rentals which are

calculated based on a fixed percentage on the tenant’s revenue.



30 CONTINGENT LIABILITIESAt 31 March 2016, the Group pledged certain leasehold land and buildings and investment

properties to secure bank loans borrowed by companies under the control of the Controlling

Shareholder. The carrying values of the leasehold land and buildings and investment properties are

analysed as follows:

2016 2015

RMB’000 RMB’000

Leasehold land and buildings 7,715 88,439

Investment properties 14,000 26,504

21,715 114,943

As at the end of the reporting period, the directors of the Company do not consider it probable that

a claim will be made against the Group under the pledge. The exposure of the Group at the end of

the reporting period under the pledge is RMB36,700,000, being the aggregate principal amount of

the bank loans drawn by the related companies of the Group (31 March 2015: RMB69,700,000).

31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTSExposure to credit, liquidity, interest rate and currency risks arises in the normal course of the

Group’s business. The Group considers its exposure to equity price risk arising from its equity

investments in other entities to be insignificant.

The Group’s exposure to these risks and the financial risk management policies and practices used by

the Group to manage these risks are described below.

(a) Credit risk

The Group’s credit risk is primarily attributable to trade and other receivables and available-

for-sale debt investments. Management has a credit policy in place and the exposures to these

credit risks are monitored on an ongoing basis.

In respect of available-for-sale debt investments, the Group’s strategy is to place the

investments with well known funds management company or financial institution. Accordingly,

the Group considers its exposure to credit risk to be low in this respect.

In respect of trade and other receivables, individual credit evaluations are performed on all

customers and debtors requiring credit over a certain amount. These evaluations focus on the

customer’s and debtor’s past history of making payments when due and current ability to pay,

and take into account information specific to the customer and debtor as well as pertaining

to the economic environment in which the customer and debtor operates. Credit terms of

one to three months from the date of billing or separately negotiated repayment schedules

may be granted to customers and debtors, depending on credit assessment carried out by

management on an individual customer basis. Normally, the Group does not obtain collateral

from customers and debtors.



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(a) Credit risk (continued)

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of

each customer and debtor rather than the industry or country in which the customers and

debtors operate and therefore significant concentrations of credit risk primarily arise when

the Group has significant exposure to individual customers and debtors. At 31 March 2016,

26.8% (31 March 2015: 23.0%) and 55.6% (31 March 2015: 50.3%) of the total trade and

bills receivables was due from the Group’s largest trade debtor and the five largest trade

debtors respectively.

Except for the pledges of certain of the Group’s properties for bank loans drawn by related

companies as set out in Note 30, the Group does not provide any other guarantees which

would expose the Group or the Company to credit risk. The maximum exposure to credit risk

in respect of these pledges is disclosed in Note 30.

Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from

available-for-sale debt investments and trade and other receivables are set out in Notes 18

and 20, respectively.

(b) Liquidity risk

The treasury function is centrally managed by the Group, which including the short term

investment of cash surpluses and the raising of loans to cover expected cash demands. The

Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending

covenants, to ensure that it maintains sufficient reserves of cash and adequate committed

lines of funding from major financial institutions to meet its liquidity requirements in the short

and longer term.

The following table shows the remaining contractual maturities at the end of the reporting

period of the Group’s non-derivative financial liabilities, which are based on contractual

undiscounted cash flows (including interest payments computed using contractual rates or, if

floating, based on rates current at the end of the reporting period) and the earliest dates the

Group can be required to pay.

For the bank loan subject to repayment on demand clauses which can be exercised at

the bank’s sole discretion, the analysis shows the cash outflow based on the contractual

repayment schedule and, separately, the impact to the timing of the cash outflows if the bank

was to invoke its unconditional rights to call the loan with immediate effect.



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(b) Liquidity risk (continued)

2016

Contractual undiscounted cash outflow

More than More than Carrying

Within 1 1 year but 2 years but More amount

year or on less than less than than at 31

demand 2 years 5 years 5 years Total March


Trade and other payables

measured at amortised cost 437,628 – – – 437,628 437,628

Bank and other loans 819,962 43,501 244,913 43,968 1,152,344 1,061,842

1,257,590 43,501 244,913 43,968 1,589,972 1,499,470

2015

Contractual undiscounted cash outflow

More than More than Carrying

Within 1 1 year but 2 years but More amount

year or on less than less than than at 31

demand 2 years 5 years 5 years Total March


Trade and other payables

measured at amortised cost 452,603 – – – 452,603 452,603

Bank and other loans 741,841 50,295 220,669 131,429 1,144,234 1,014,071

Convertible bonds

– liability component 2,910 99,921 – – 102,831 89,188

1,197,354 150,216 220,669 131,429 1,699,668 1,555,862



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(c) Interest rate risk

The Group’s interest rate risk arises primarily from interest bearing borrowings. Borrowings

issued at variable rates and at fixed rates expose the Group to cash flow interest rate risk and

fair value interest rate risk respectively.

(i) Interest rate profile

The following table details the interest rate profile of the Group’s borrowings at the

end of the reporting period.

2016 2015

Effective Effective

interest rate interest rate

% RMB’000 % RMB’000

Fixed rate borrowings:

Bank and other loans 5.38% 1,061,842 7.08% 1,014,071

Convertible bonds

– liability component – – 10.79% 89,188

1,061,842 1,103,259

Fixed rate borrowings as

a percentage of total

borrowings 100% 100%

(d) Currency risk

The Group is exposed to currency risk primarily through sales, purchases and borrowings

which give rise to receivables, payables, loans and cash balances that are denominated in a

foreign currency, i.e. a currency other than the functional currency of the operations to which

the transactions relate. The currencies giving rise to this risk are primarily USD, RMB, HK$ and

EUR. The Group manages this risk as follows:

(i) Recognised assets and liabilities

In respect of receivables, payables and borrowings denominated in foreign currencies,

the Group ensures that the exposure is kept to an acceptable level, by buying

and selling foreign currencies at spot rates where necessary to address short-term

imbalances.



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(d) Currency risk (continued)

(ii) Exposure to currency risk

The following table details the Group’s exposure at the end of the reporting period

to currency risk arising from recognised assets or liabilities denominated in a currency

other than the functional currency of the entity to which they relate. For presentation

purposes, the amounts of the exposure are shown in RMB, translated using the spot

rates at the year end date. Differences resulting from the translation of the financial

statements of foreign operations into the Group’s presentation currency are excluded.

2016

Exposure to foreign currencies

USD HK$ EUR

RMB’000 RMB’000 RMB’000

Loan to a subsidiary – 9,607 –

Cash and cash equivalents 703 556 53

Trade and other payables – (72,921) –

Bank and other loans (5,291) (10,023) (192,205)

Gross exposure arising from

recognised assets and liabilities (4,588) (72,781) (192,152)

2015

Exposure to foreign currencies

USD HK$ EUR

RMB’000 RMB’000 RMB’000

Loan to a subsidiary – 9,607 –

Cash and cash equivalents 363 771 14

Trade and other payables – (6,168) –

Bank and other loans (5,078) (11,670) –

Convertible bonds – (134,883) –

Gross exposure arising from

recognised assets and liabilities (4,715) (142,343) 14



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(d) Currency risk (continued)

(iii) Sensitivity analysis

The following table indicates the instantaneous change in the Group’s results after

tax and retained profits that would arise if foreign exchange rates to which the Group

has significant exposure at the end of the reporting period had changed at that date,

assuming all other risk variables remained constant. In this respect, it is assumed that

the pegged rate between HK$ and USD would be materially unaffected by any changes

in movement in value of the USD against other currencies.

2016 2015

(Decrease)/ (Decrease)/

Increase/ increase in Increase/ increase in

(decrease) profit after (decrease) profit after

in foreign tax and in foreign tax and

exchange retained exchange retained

rates profits rates profits

RMB’000 RMB’000

USD 10% (384) 10% (394)

(10%) 384 (10%) 394

HK$ 10% (5,424) 10% (11,804)

(10%) 5,424 (10%) 11,804

EUR 10% (16,045) 10% 1

(10%) 16,045 (10%) (1)

Results of the analysis as presented in the above table represent an aggregation of

the instantaneous effects on each of the Group entities’ results after tax and retained

profits measured in the respective functional currencies, translated into RMB at the

exchange rates ruling at the end of the reporting period for presentation purposes.

The sensitivity analysis assumes that the change in foreign exchange rates had been

applied to re-measure those financial instruments held by the Group which expose

the Group to foreign currency risk at the end of the reporting period, including

inter-company payables and receivables within the Group which are denominated in

a currency other than the functional currencies of the lender or the borrower. The

analysis excludes differences that would result from the translation of the financial

statements of foreign operations into the Group’s presentation currency. The analysis is

performed on the same basis for 2015.



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(e) Fair value measurement

(i) Financial assets and liabilities measured at fair value

Fair value hierarchy

The following table presents the fair value of the Group’s financial instruments

measured at the end of the reporting period on a recurring basis, categorised into the

three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement. The

level into which a fair value measurement is classified is determined with reference

to the observability and significance of the inputs used in the valuation technique as

follows:

• Level1valuations:FairvaluemeasuredusingonlyLevel1inputs,i.e.unadjusted

quoted prices in active markets for identical assets or liabilities at the

measurement date.

• Level 2 valuations: Fair value measured using Level 2 inputs, i.e. observable

inputs which fail to meet Level 1, and not using significant unobservable inputs.

Unobservable inputs are inputs for which market data are not available.

• Level3valuations:Fairvaluemeasuredusingsignificantunobservableinputs.

Fair value Fair value

measurements measurements

as at 31 March as at 31 March

2016 categorised into 2015 categorised into


at 31 at 31

March March

2016 Level 2 Level 3 2015 Level 2 Level 3


Recurring fair value

measurements

Assets:

Unlisted debt securities

(Note 18) 644,924 – 644,924 531,289 – 531,289

Liabilities:

Derivative components of

the convertible bonds

(Note 25) – – – 45,695 45,695 –



31 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)(e) Fair value measurement (continued)

(i) Financial assets and liabilities measured at fair value (continued)

Fair value hierarchy (continued)

Valuation techniques and inputs used in Level 2 fair value measurements

The estimate of the fair value of the derivative components of the Shi Hui Bonds are

measured based on a binomial option pricing model. Details of the assumptions used

are as follows:

Derivative components

of the Shi Hui Bonds

Dates of valuation 05/06/2015 31/03/2015

(Note (aa))

Share price (HK$) 0.690 0.415

Exercise price (HK$) 0.300 0.300

Expected volatility (Note (bb)) 55.291% 48.685%

Dividend yield (Note (bb)) – –

Maturity period 1.24 years 1.42 years

Conversion period 1.24 years 1.42 years

Discount rate (Note (bb)) 9.597% 9.340%

Notes:

(aa) These inputs represented the assumptions used in the estimate of the fair value of the

derivative components of the Shi Hui Bonds on 5 June 2015, which was the date the

remaining of the Shi Hui Bonds was converted into ordinary shares.

(bb) The discount rate used is derived from the risk free interest rate with reference to

the Hong Kong Exchange Fund Notes as of the valuation dates plus credit spread of

comparable notes with similar credit rating, coupons and maturities to discount the

liability component of the Shi Hui Bonds. The expected volatility is based on the historical

volatility, adjusted for any expected changes to future volatility based on publicly available

information. Dividend yield are based on historical dividends.

Information about Level 3 fair value measurements

Significant

Valuation unobservable

techniques inputs Range

Unlisted debt securities Discounted cash Discount Rate 5.2% to

flow model 7.65%




(i) Financial assets and liabilities measured at fair value (continued)

Fair value hierarchy (continued)

The fair value of unlisted debt securities is determined using the discounted cash flow

model and the significant unobservable input used in the fair value measurement is

discount rate. The fair value measurement is negatively correlated to the discount

rate. As at 31 March 2016, it is estimated that with all other variables held constant,

an increase/decrease in the discount rate by 5% would have decreased/increased the

Group’s other comprehensive income by RMB885,000.

The movements during the period in the balance of the Level 3 fair value measurement

are as follow:

2016 2015

RMB’000 RMB’000

Unlisted debt securities:

At 1 April 531,289 250,000

Payment for purchases 640,000 520,000

Total gains recognised in other comprehensive

income during the year 28,049 36,525

Proceeds from sales (554,414) (275,236)

At 31 March 644,924 531,289

Total gains for the year reclassified from

other comprehensive income 34,414 25,236




(ii) Fair value of financial assets and liabilities carried at other than fair value

The carrying amounts of the Group’s financial instruments carried at cost or amortised

cost are not materially different from their fair values at 31 March 2016 and 2015

except for the following financial instruments, for which their carrying amounts and

fair value and the level of fair value hierarchy are disclosed below:

2016 2015


Carrying measurements Carrying measurements

amount at 31 March amount at 31 March

at 31 categorised at 31 categorised

March into Level 3 March into Level 3

RMB’000 RMB’000 RMB’000 RMB’000

Assets

Available-for-sale equity investments 72,194 * 82,881 *

Liabilities

Long-term bank and other loans

(Note (aa)) 271,615 290,062 316,380 327,712

Convertible bonds

– liability component (Note (aa)) – – 89,188 90,853

* The available-for-sale equity investments represent unquoted equity securities in

companies established in the PRC and are measured at cost less any impairment losses.

These investments do not have quoted market price in an active market, and accordingly,

the fair values of the investments cannot be measured reliably. Hence, the directors of the

Company consider it is not meaningful to disclose their fair values.




(ii) Fair value of financial assets and liabilities carried at other than fair value (continued)

Note (aa): Valuation techniques and inputs used in Level 3 fair value measurements

Long-term bank and other loans and convertible bonds – liability component

The fair values are estimated as being the present value of future cash flows,

discounted at current market interest rates for similar financial instruments.

The Group uses the interest rates published by the People’s Bank of China at the end

of the reporting period plus an adequate constant credit spread to discount long-

term bank and other loans. The Group used the risk free interest rate with reference

to the Hong Kong Exchange Fund Notes as of 31 March 2015 plus credit spread of

comparable notes with similar credit rating, coupons and maturities to discount the

liability component of the convertible bonds as of 31 March 2015. The interest rates

used are as follows:

2016 2015

Long-term bank and other loans 5.72% 6.90%

Convertible bonds – liability component – 9.340%



32 COMPANY-LEVEL STATEMENT OF FINANCIAL POSITIONAt 31 March 2016

(Expressed in RMB)

2016 2015 Note RMB’000 RMB’000Non-current assets Property, plant and equipment 350 354 Investments in subsidiaries 1,273,678 890,921

1,274,028 891,275

Current assets Loan to a subsidiary 9,607 9,607 Other receivables 674 455 Cash and cash equivalents 440 721

10,721 10,783

Current liabilities Other payables 238,136 227,045 Other loans 197,911 7,141

436,047 234,186

Net current liabilities (425,326) (223,403)

Total assets less current liabilities 848,702 667,872

Non-current liabilities Convertible bonds – 134,883

– 134,883

NET ASSETS 848,702 532,989

CAPITAL AND RESERVES 27 Share capital 39,374 36,138 Reserves 809,328 496,851

TOTAL EQUITY 848,702 532,989

Approved and authorised for issue by the board of directors on 29 June 2016.

Li Lixin Cheng Jianhe

Chairman Director



33 NON-ADJUSTING EVENTS AFTER THE END OF THE REPORTING PERIODAcquisition of non-controlling interests in a subsidiary of the Group

On 3 August 2015, the Company, through a wholly-owned subsidiary of the Group, entered into

an equity transfer agreement to acquire 18% equity interests in New JoySun Supermarket from the

current non-controlling equity holder of New JoySun Supermarket at a consideration of RMB38.9

million. Upon completion of the above equity transfer, the Group’s effective interest in New JoySun

Supermarket will increase from 82% to 100%. On 7 April 2016, the transfer of equity interests was

completed.

34 IMMEDIATE AND ULTIMATE HOLDING COMPANYThe directors of the Company consider the immediate and ultimate holding company of the

Company at 31 March 2016 to be Shi Hui, a company incorporated in the British Virgin Islands and

Big-Max Manufacturing Co., Ltd., a company incorporated in Hong Kong, respectively. Neither of

these companies produces financial statements available for public use.



35 POSSIBLE IMPACT OF NEW STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 MARCH 2016Up to the date of issue of these financial statements, the HKICPA has issued a few amendments and

new standards which are not yet effective for the year ended 31 March 2016 and which have not

been adopted in these financial statements. These include the following which may be relevant to

the Group.

Effective for

accounting periods

beginning on or after

Annual Improvements to HKFRSs 2012-2014 Cycle 1 January 2016

Amendments to HKAS 16 and HKAS 38, Clarification of 1 January 2016

acceptable methods of depreciation and amortisation

Amendments to HKFRS 10 and HKAS 28, Sale or contribution 1 January 2016

of assets between an investor and its associate or joint venture

Amendments to HKFRS 10, HKFRS 12 and HKAS 28, 1 January 2016

Investment entities: Applying the consolidation exception

Amendments to HKAS 1, Disclosure initiative 1 January 2016

Amendments to HKAS 7, Disclosure initiative 1 January 2017

Amendments to HKAS 12, Income taxes 1 January 2017

– Recognition of deferred tax assets for unrealised losses

HKFRS 15, Revenue from contracts with customers 1 January 2018

HKFRS 9, Financial instruments 1 January 2018

HKFRS 16, Leases 1 January 2019

The Group is in the process of making an assessment of what the impact of these new standards

and amendments to standards is expected to be in the period of initial application. So far it has

concluded that except for HKAFS 15, Revenue from contracts with customers, for which the Group

is still under the process in assessing the impact of its application,the adoption of the remaining new

standards and amendments to standards is unlikely to have a significant impact on the consolidated

financial statements.

5-YEAR FINANCIAL SUMMARY(Expressed in RMB unless otherwise indicated)


GENERAL INFORMATIONThe consolidated results and the assets and liabilities of the Group of the last five financial years, as

extracted from the Group’s published audited accounts and reclassified as appropriate, are set below:

2016 2015 2014 2013 2012


(Restated)

Revenue 1,085,709 1,158,042 783,003 301,205 393,890

(Loss)/Profit before taxation (279,808) 100,512 1,294,724 (29,411) 13,717

Income tax 304,820 (20,202) (333,131) (2,620) (7,769)

Profit/(loss) for the year 25,012 80,310 961,593 (32,031) 5,948

Assets and liabilities

Total assets 3,561,758 3,994,600 3,982,598 531,705 540,939

Total liabilities (1,821,973) (2,281,389) (2,355,093) (347,493) (333,260)

Net assets 1,739,785 1,713,211 1,627,505 184,212 207,679

LISI GROUP (HOLDINGS) LIMITED利時集團(控股)有限公司

Workshop 06 & 07, 36th Floor, King Palace Plaza, No. 52A Sha Tsui Road, Tsuen Wan, New Territories, Hong Kong

香港新界荃灣沙咀道52A號皇廷廣場36樓06-07室

Documents

LISI GROUP (HOLDINGS) LIMITEDlisigroup.com.hk/file/LTN20160728668.pdfResources Limited (1231.HK) and China Shun Ke Long Holdings Ltd. (974.HK). He was independent non-executive director